{"id":19090,"date":"2023-06-20T08:11:34","date_gmt":"2023-06-20T08:11:34","guid":{"rendered":"https:\/\/www.startupblink.com\/blog\/?p=19090"},"modified":"2023-07-31T13:15:04","modified_gmt":"2023-07-31T13:15:04","slug":"global-startup-economy-update","status":"publish","type":"post","link":"https:\/\/www.startupblink.com\/blog\/global-startup-economy-update\/","title":{"rendered":"Global Startup Economy Update"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"19090\" class=\"elementor elementor-19090\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-425c543e elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"425c543e\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-4f090bbb\" data-id=\"4f090bbb\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-1d57d4e3 elementor-widget elementor-widget-text-editor\" data-id=\"1d57d4e3\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<p><em>In the <a href=\"https:\/\/lp.startupblink.com\/report\/?utm_campaign=blog&amp;utm_medium=blog&amp;utm_source=blog\">Global Startup Ecosystem Index<\/a>, before we present the results, we introduced a section that gives an overview of the current state of the Global Startup Ecosystem, which begins with the Global Startup Economy Update.<\/em><\/p><p><span style=\"font-weight: 400;\">It is evident that 2021 gave rise to a startup valuation bubble which is currently undergoing a major recalibration in valuations for both private and publicly traded startups. The majority of startups that recently became public via IPO are trading much lower than their initial price, some have decreased up to 90% of value, demonstrating the depth of the current downturn and lack of appetite for risky assets.\u00a0\u00a0\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">The government subsidies and free money injected into the market, in combination with historically low (and sometimes negative) interest rates to combat the negative effects of the COVID-19 pandemic, accelerated the creation of this bubble. Rising inflation, followed by a rapid increase of interest rates, had a severe impact on startups, as the risk associated with investing in this volatile asset class of mainly non-profitable companies has surged. Thus, startups are now compelled to prioritize profitability, and set aside models that prioritize growth. As funding is becoming less accessible to founders, many are now opting to bootstrap their ventures.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">The general expectation is that as long as interest rates stay high, more and more startups will run out of money, and we will enter a winter period of startup funding. This should not discourage entrepreneurs, as some of the most successful tech companies, such as Meta and Alphabet, were established and expanded in times of crisis.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">The following are some of the most impactful economic events that influenced the global startup ecosystem over the last 12 months: <\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-5b3d271 elementor-widget elementor-widget-image\" data-id=\"5b3d271\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/www.statista.com\/statistics\/1312060\/us-inflation-rate-federal-reserve-interest-rate-monthly\/\">\n\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"704\" height=\"435\" src=\"https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/06\/Screenshot-2023-06-20-094444.png\" class=\"attachment-full size-full wp-image-19093\" alt=\"\" srcset=\"https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/06\/Screenshot-2023-06-20-094444.png 704w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/06\/Screenshot-2023-06-20-094444-300x185.png 300w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/06\/Screenshot-2023-06-20-094444-150x93.png 150w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/06\/Screenshot-2023-06-20-094444-45x28.png 45w\" sizes=\"100vw\" \/>\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-f3b73ac elementor-widget elementor-widget-text-editor\" data-id=\"f3b73ac\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<p><a href=\"https:\/\/www.statista.com\/statistics\/1312060\/us-inflation-rate-federal-reserve-interest-rate-monthly\/\"><span style=\"font-weight: 400;\">Source: Statista<\/span><\/a><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-ddf07a0 elementor-widget elementor-widget-heading\" data-id=\"ddf07a0\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Decline of Startup Funding<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-8a4da49 elementor-widget elementor-widget-heading\" data-id=\"8a4da49\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<h5 class=\"elementor-heading-title elementor-size-default\">Startup Funding Volume (US$ billion) and Number of Deals\n<\/h5>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-d038503 elementor-widget elementor-widget-image\" data-id=\"d038503\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"408\" height=\"614\" src=\"https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/06\/Screenshot-2023-06-20-100027.png\" class=\"attachment-full size-full wp-image-19096\" alt=\"\" srcset=\"https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/06\/Screenshot-2023-06-20-100027.png 408w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/06\/Screenshot-2023-06-20-100027-199x300.png 199w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/06\/Screenshot-2023-06-20-100027-100x150.png 100w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/06\/Screenshot-2023-06-20-100027-45x68.png 45w\" sizes=\"100vw\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-449f1ce elementor-widget elementor-widget-text-editor\" data-id=\"449f1ce\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">After experiencing a record year in 2021, global startup funding in 2022 declined by more than 30%. Although this number is still higher than in 2020 and 2019, most of the decline occurred in the second half of 2022, signaling an accelerating downturn in the investment ecosystem. When it comes to the number of startup funding deals, Crunchbase data shows that this number only declined by around 3%, from 32,058 deals in 2021 to 31,067 in 2022. This indicates a substantial decrease in the ticket size, which was US$ 19.5 million in 2021 and 13.3 million in 2022. In this difficult investment climate, founders will need to change their mindset: this year, early revenue is more important than massive growth.<\/span><\/p><p><span style=\"font-weight: 400;\">It is interesting to see that angel-seed investment had a slight increase in 2022. This shows the resilience of early stage investment compared to later stages which are more correlated with the massive decrease of value in publicly traded tech companies. Late stage investments registered a 43% year-over-year fall.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">The real story is in the initial numbers of 2023. According to Crunchbase, global funding in the first quarter is at US$ 76 billion, a 53% decline from the US$ 162 billion in the first quarter of 2022. If we remove the massive investment done in both OpenAI and Stripe in Q1 2023, the decrease would be a whopping 63%. Tough times are ahead.\u00a0<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-a0fbbe2 elementor-widget elementor-widget-heading\" data-id=\"a0fbbe2\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">The collapse of the Silicon Valley Bank<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-8dc4d0d elementor-widget elementor-widget-image\" data-id=\"8dc4d0d\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/06\/mariia-shalabaieva-aTlp4VoCCw4-unsplash-1024x576.jpg\" class=\"attachment-large size-large wp-image-19098\" alt=\"\" srcset=\"https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/06\/mariia-shalabaieva-aTlp4VoCCw4-unsplash-1024x576.jpg 1024w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/06\/mariia-shalabaieva-aTlp4VoCCw4-unsplash-300x169.jpg 300w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/06\/mariia-shalabaieva-aTlp4VoCCw4-unsplash-150x84.jpg 150w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/06\/mariia-shalabaieva-aTlp4VoCCw4-unsplash-768x432.jpg 768w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/06\/mariia-shalabaieva-aTlp4VoCCw4-unsplash-1536x864.jpg 1536w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/06\/mariia-shalabaieva-aTlp4VoCCw4-unsplash-2048x1152.jpg 2048w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/06\/mariia-shalabaieva-aTlp4VoCCw4-unsplash-1100x620.jpg 1100w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/06\/mariia-shalabaieva-aTlp4VoCCw4-unsplash-45x25.jpg 45w\" sizes=\"100vw\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-a9b587d elementor-widget elementor-widget-text-editor\" data-id=\"a9b587d\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">As if the massive downturn in investments was not enough, startups were hit by another shocking surprise with the collapse of the Silicon Valley Bank. As reported by Crunchbase, the bank had relationships with over 50% of the VCs in the US, but the effects of the collapse have been felt around the world. Fortunately, the US government has been quick to guarantee the assets of every deposit in the bank, and prevented a massive shockwave with implications that could have been historical on the global startup ecosystem and VC industry. Regardless, startups received an important wake up call about the need to diversify their assets and respond with agility to any crisis as it evolves.\u00a0\u00a0<\/span><\/p><h2>Unicorns losing their celebrated status? Not yet.<\/h2><p><span style=\"font-weight: 400;\">The curious case of unicorns shows that the real impact of the downturn has still not fully materialized in private sector startup valuations. Publicly traded former unicorns have lost substantial value, and some high valuation startups such as Stripe, Klarna, and Instacart have already raised money in a downround (valuation lower than the previous round of investment). However, the number of unicorns (privately held startups valued at above US $1 billion) has not significantly changed. <\/span><\/p><p><span style=\"font-weight: 400;\">On the contrary; The number of unicorns has steadily grown over the years, with <\/span><b>80%<\/b><span style=\"font-weight: 400;\"> growth in 2021 and <\/span><b>67%<\/b><span style=\"font-weight: 400;\"> in 2022. However, in the last year we have witnessed a slowdown of only<\/span><b> 8.49%<\/b><span style=\"font-weight: 400;\"> growth in unicorns. This means that unicorns are still being created, but at a much slower pace compared to previous years. Unicorns and startups will avoid a downround as much as they can, as this has a demoralizing effect on the team and investors, and might also cost them their unicorn status. However, considering that 20% of unicorns are right at the US$ 1 billion mark as of April 2023, we expect many unicorns to lose their status as they will be forced to raise more investment soon, especially considering many of them are not profitable yet. Some estimates forecast at least 50% of the current 1,100+ unicorns around the world will lose their status if they attempt to raise money in the current environment.\u00a0<\/span><\/p><h2>IT Sector Layoffs\u00a0<\/h2><p><span style=\"font-weight: 400;\">While the global employment situation remained stable, we saw an increased trend of layoffs in IT and startup sectors. Since these rounds of layoffs are mainly impacting the Tech sector, they are further deflating the allure of startups and their impact and share of the economy, even after years of startups being one of the most prominent sectors in the global economy. According to <\/span><a href=\"https:\/\/layoffs.fyi\/\"><span style=\"font-weight: 400;\">Layoffs.fyi<\/span><\/a><span style=\"font-weight: 400;\">, almost <\/span><b>200,000 people were laid off in the IT sector in the first 4.5 months of 2023.<\/b><span style=\"font-weight: 400;\"> This number already surpassed the 164,591 layoffs recorded for the whole year in 2022. As global tech giants such as Google, Meta, and Microsoft began their workforce reductions, many companies followed in their footsteps.\u00a0<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-5a29e43 elementor-widget elementor-widget-heading\" data-id=\"5a29e43\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<h3 class=\"elementor-heading-title elementor-size-default\">Download the Global Startup Ecosystem Index to discover the current state of the Global Startup Ecosystem<\/h3>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-543b30f elementor-widget elementor-widget-button\" data-id=\"543b30f\" data-element_type=\"widget\" data-widget_type=\"button.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-button-wrapper\">\n\t\t\t<a class=\"elementor-button elementor-button-link elementor-size-sm\" href=\"https:\/\/lp.startupblink.com\/report\/?utm_source=blogs&#038;utm_medium=blogs&#038;utm_campaign=report\">\n\t\t\t\t\t\t<span class=\"elementor-button-content-wrapper\">\n\t\t\t\t\t\t<span class=\"elementor-button-text\">Download the Global Startup Ecosystem Index<\/span>\n\t\t<\/span>\n\t\t\t\t\t<\/a>\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-b3b3145 elementor-widget elementor-widget-text-editor\" data-id=\"b3b3145\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<h1><b>About Us:<\/b><\/h1><p><span style=\"font-weight: 400;\"><a href=\"https:\/\/www.startupblink.com\/\">StartupBlink<\/a> is the world\u2019s most comprehensive startup ecosystem map and research center, <a href=\"https:\/\/lp.startupblink.com\/ecosystemdevelopment\/?utm_source=blogs&amp;utm_medium=blogs&amp;utm_campaign=EP\">working with over 100 government entities worldwide<\/a>. StartupBlink\u2019s global startup ecosystem map has tens of thousands of registered startups, coworking spaces, and accelerators, creating a robust sample of innovation globally.<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-56f3306 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"56f3306\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-9138eca\" data-id=\"9138eca\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-84eedf9 elementor-widget elementor-widget-heading\" data-id=\"84eedf9\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Our Partners:<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-30def7d elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"30def7d\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-6de9cda\" data-id=\"6de9cda\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-83bc7af elementor-widget elementor-widget-image\" data-id=\"83bc7af\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"1024\" src=\"https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/05\/Partner-Logos-2023-1-1-1024x1024.png\" class=\"attachment-large size-large wp-image-18792\" alt=\"\" srcset=\"https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/05\/Partner-Logos-2023-1-1-1024x1024.png 1024w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/05\/Partner-Logos-2023-1-1-300x300.png 300w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/05\/Partner-Logos-2023-1-1-150x150.png 150w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/05\/Partner-Logos-2023-1-1-768x768.png 768w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/05\/Partner-Logos-2023-1-1-700x700.png 700w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/05\/Partner-Logos-2023-1-1-350x350.png 350w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/05\/Partner-Logos-2023-1-1-240x240.png 240w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/05\/Partner-Logos-2023-1-1-120x120.png 120w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/05\/Partner-Logos-2023-1-1-100x100.png 100w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/05\/Partner-Logos-2023-1-1-45x45.png 45w, https:\/\/www.startupblink.com\/blog\/wp-content\/uploads\/2023\/05\/Partner-Logos-2023-1-1.png 1080w\" sizes=\"100vw\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>In the Global Startup Ecosystem Index, before we present the results, we introduced a section that gives an overview of the current state of the Global Startup Ecosystem, which begins with the Global Startup Economy Update. It is evident that 2021 gave rise to a startup valuation bubble which is currently undergoing a major recalibration [&hellip;]<\/p>\n","protected":false},"author":27,"featured_media":19733,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"image","meta":{"inline_featured_image":false,"footnotes":""},"categories":[1,26,35,61],"tags":[94],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Global Startup Economy Update<\/title>\n<meta name=\"description\" content=\"Discover the current state of the global startup economy. Explore the impact of the startup bubble, declining funding, and changing dynamics of unicorns.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.startupblink.com\/blog\/global-startup-economy-update\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Global Startup Economy Update\" \/>\n<meta property=\"og:description\" content=\"Discover the current state of the global startup economy. 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