Compass has released its Startup Ecosystem Ranking 2015 report, the company announced today. The automated reporting and benchmarking software provider formerly known as Startup Genome is following up on its 2012 report, with insights on the world’s top startup territories. To compile the report, Compass used data from startup hubs all around the world. It gathered proprietary survey results as well as information from publicly available sources like Crunchbase and AngelList.
The goal is to weigh the world’s startup ecosystems and find the best places for budding entrepreneurs to set up shop. Compass says it approached the project from the point of view of “an entrepreneur seeking a location for his or her startup.” The company considered factors such as funding, availability of talent, startup experience, and so on, in order to determine the ranking for each city.
Founders will like America
As expected, the 2015 ranking shows a strong US presence – seven out of 20 cities in there can be reached using a +1 country code. In fact, not much has changed in the top 20 since the 2012 ranking, barring some reshuffling of positions and the swapping of Waterloo, Melbourne, and Santiago with newcomers Austin, Amsterdam, and Montreal.
But much like the magnetic North, one constant everyone can count on is Silicon Valley’s domination of the rankings (barring, I don’t know, a magnetic field flip or something). That small patch of land in California is home to almost 50 percent of the value of all exits in the top 20 territories over the past two years – more than all of the other 19 combined. To the surprise of absolutely no one, the Valley enjoys top capital, talent, and performance, helping it retain pole position.
Again as in the 2012 report, Asia is represented by Singapore and Bangalore in the top 20, in spots 10 and 15 respectively. But note that countries such as China, Japan, Taiwan, and South Korea are completely absent in the rankings, which prevents the report from offering a clear picture of the startup ecosystems in the East. The inclusion of these hubs would probably knock Singapore down a few places.
Compass says language barriers limit the data available, and that also plagued the 2012 report. The company expects to have more data in these territories later this year. The team also collected data from cities like Kuala Lumpur, Jakarta, New Delhi, and Mumbai, but they did not make the top 20.
Singapore is counted among the ecosystems that made the biggest leaps from the 2012 report to this current one, climbing up seven rungs in the ladder. The city-state gets above average marks on startup experience, funding, and market reach, and slightly lower marks on performance.
Where it gets dismal, however, is talent. According to the rankings, talent is both hard to find and hard to maintain in Singapore. To derive that conclusion, the report looked at factors such as availability and quality of talent, proportion of talent with prior startup experience, ease of acquiring overseas talent, and cost.
Still, Singapore’s leap up to 10th place might be a cause for celebration. However, it’s a little unclear whether the ascent is due to real evolution of the ecosystem or whether it is simply based on more accurate data than the 2012 report.
Other interesting findings in the report include the following:
Total venture capital investment across the top 20 ecosystems rose 95 percent from 2013 to 2014. Berlin is a leader here, with VC growing 12-fold. Bangalore showed 4x growth. Bangalore was also the ecosystem with the most growth in seed funding rounds with 53 percent, followed by Sydney and Austin (33 and 30 percent respectively).
All 20 ecosystems show growth in the total number of startups during the past two years, with an average growth of nine percent in the number of seed-funded startups across the top territories.
The lack of gender equality is common across all startup ecosystems. However, there is a growing trend of female entrepreneurs – they have increased in number by 80 percent across the world in the last three years. 18 percent of the startups in the top 20 ecosystems in 2015 have a female founder, up from 10 percent in the 2012 report. Chicago leads the charge here with 30 percent female founders out of the top 20.
Startup ecosystems in the US are the only ones where software engineers are paid higher wages working for a startup than a corporate firm. In other cities, the salaries are roughly the same, according to the report. This highlights the demand for technical talent in the top startup ecosystems, and also how hard this talent is to come by across the world.
New York has climbed to second place (from fifth in 2012). The report has found that a major reason for this is that lots of overseas startups chose the Big Apple as the location for a second office (usually a sales office) and their foothold into the US market.
The top 20
Here is the the full list of the 20 best startup ecosystems in the world, according to the Compass report:
New York City
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