Tag Archives: startup

Startup ecosystems around the world fast challenging Silicon Valley

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While Silicon Valley is still the world’s largest and most-influential start-up ecosystem, it no longer wields the power and influence it once did. Flourishing communities in Latin America, Europe, the Middle East and Asia have grown considerably over recent years and are now beginning to challenge Silicon Valley’s domination in technology innovation.

The Startup Ecosystem Report 2012 argues that this trend suggests that countries are shifting from service-based economies to become increasingly driven by a new generation of fast-moving software and technology organisations. 

Download the full report here. You can also view the global rankings table here (and below).

The report finds that Tel Aviv, a highly advanced ecosystem, is the leading alternative to Silicon Valley, while on Silicon Valley’s doorstep, flourishing communities in New York and Los Angeles mean the USA is home to three of the largest ecosystems in the world.

Across the Atlantic, London is by far the largest startup ecosystem in Europe, although its output is still just a third of that of Silicon Valley. Outside of the more traditional markets, the startup ecosystem in Sao Paulo is growing rapidly and creates more jobs for the local community than Silicon Valley does for its own.

The report identifies the ecosystem factors which have contributed to the success of Silicon Valley and uses it as a baseline to compare how well suited other cities are to fostering entrepreneurs.

On this basis, the top 20 startup ecosystems globally are:

1. Silicon Valley
2. Tel Aviv
3. Los Angeles
4. Seattle
5. New York City
6. Boston
7. London
8. Toronto
9. Vancouver
10. Chicago
11. Paris
12. Sydney
13. Sao Paulo
14. Moscow
15. Berlin
16. Waterloo (Canada)
17. Singapore
18. Melbourne
19. Bangalore
20. Santiago

In-depth research provides tangible findings for entrepreneurs, investors and policy makers

The Startup Genome, in partnership with Telefonica Digital, engaged with more than 50,000 entrepreneurs across the world to understand how well placed different ecosystems are to support the development and success of startups. Users of StartupCompass.co – a business intelligence tool for startups – submitted information on their organisations based upon a range of factors, including financial, sales, marketing, product, business model, team, and market information.

Some of the key findings of the report are as follows:

– Even well-developed ecosystems such as New York andLondon are suffering from a funding gap: they each have more than 70% less ‘risk’ capital available for early-stage, pre-product-market fit startups

– Silicon Valley’s success to date can be attributed in part to the attitude of its entrepreneurs. Founders in Silicon Valleywork longer than anywhere else, with an average day lasting 9.94 hours. Motivationally, they tend to be driven by impact rather than product

– New York can claim to be the global capital for female tech entrepreneurs. Nearly a fifth of New York’s entrepreneurs are women and it is home to twice as many female-run startups as Silicon Valley

– Santiago is a great example of an ecosystem kick-started by policy makers, with 4.81 mentors on average (nearly 25% more than Silicon Valley)

– Silicon Valley has left its imprint on all global startup ecosystems. Berlin (4%) and Sao Paulo (7%) have the least founders that lived in Silicon Valley, Singapore (33%) and Waterloo (35%) have the most entrepreneurs that were previously based in Silicon Valley

– Even though Singapore has a relatively well-established funding environment, the risk tolerance of founders is the lowest within the top 20 ecosystems

(above video) Telefonica Digital’s Gonzalo Martin-Villa and the Startup Genome’s Bjoern Lasse Herrman explain some of the thinking behind the report.

Mapping key startup trends around the world

“I am really excited to reveal these insights around how global technology startup ecosystems stack up. Our hope is by completing the first data-driven, comparative study of this global phenomenon we will help to facilitate a constructive public dialogue,” explained Bjoern Lasse Herrmann, CEO of the Startup Genome.

“We created this report for three reasons: firstly, to put a spotlight on the emerging hotspots of technology entrepreneurship that will be responsible for powering a massive global socio-economic structural shift; secondly, to further democratise the knowledge necessary to help spread the merits of Silicon Valley; and thirdly, to give actionable insights to entrepreneurs, investors, corporate development departments and policy makers.”

Gonzalo Martin-Villa, CEO of Wayra, Telefónica Digital’s global startup accelerator, said: “These results tangibly demonstrate how entrepreneurship is flourishing all over the world. We are now seeing emerging ecosystems beginning to act as real viable alternatives to the traditional centres of technology innovation.”

Download the full report from the Telefonica Digital Hub or Startup Compass. The authors can be engaged with by tweeting about this report using #startupecosystem and mentioning @tefdigital and@startupgenome.

Rankings table - Startup Ecosystem Report 2012

Lean Eric

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I was there!
I got to attend the BLN Lean Start-Up event last night, with Eric Ries presenting his thoughts to an audience of entrepreneurs. I talked to one attendee who’d flown in from an unnamed European country just for the event, and a lawyer who’d changed from smart casual into a suit and tie. In other words I was just there to listen, and here’s what I heard. (By the way I did get the chance to make friends with Davor Hebel from Fidelity Growth Partners, following Eric’s prompting to introduce ourselves.)

The audience for Eric RiesPhoto by Stuart Glendinning Hall

Essentially Eric said that the traditional tools of scientific management were not so much use to entrepreneurs, whatever type or size of organisation. That what was needed though was a validated means to manage entrepreneurial activity. This is what he suggests the Lean Startup methodology provides.

Suits vs engineers
Of course it’s not perfect, as he admitted when he presents to engineers they blame the lack of success on the business people, and vice versa. So there’s still some magic required to apply in bringing the business and tech people together, but how to do that seemed to lacking? Fortunately not long after I spotted a nice example of a lean approach to product development in the recent edition of Wired UK, with the piece about German games company wooga’s approach, which mixes e-commerce, usability, and games design to great effect: ‘Test. Test. Test: How wooga turned the games business into a science’. Love wooga’s slogan for sure: “Be fast and be bold. Only do features that increase DAU monetisation.” DAU stands for daily active users, btw. Which if you think about it is also a great way to get engineers and business folks to agree, using the real time data to guide product development. Certainly this holding entrepreneurs to account is a big theme with Eric Ries, that you need to do small scale testing to get validated results. So there it is the accounting method is the means to unite suits and engineers!

Q. So how does this accounting method work? Answer below, from WSJ’s ‘The Nearly Cult of the Lean Start-Up’

A. It has to be quantifiable or this is all a waste of time

This idea of value is what Mr. Ries means when he talks about accounting. “It has to be quantifiable or this is all a waste of time,” he says. We can draw a lot of valuable lessons from science. The proof in science is that you have learned how to do experiments that show the right results. The same thing is true for validated learning. If we have learned something interesting, then prove it by building products that are in line with that learning.”

This is the development cycle Mr. Ries calls “build-measure-learn”. Build your product, see how people use it, what do they like, what do they click on, what do they hate, and use that to inform your next decisions.

But in order to know how successful or otherwise you are, you need a system of evaluating value.

“That is accounting. We have all been indoctrinated with thinking that accounting is about tracking money, but money just doesn’t work very well when the numbers are so small, like in an early stage start up. There is no RoI, there is no profitability. Everything is close enough to zero that the accountants don’t care.

If 10 people in a row hate my product, isn’t that telling me something?

“The units of innovation accounting are not the gross numbers. Rather than focus on how much money we make, we might look at what is the percentage of customers who pay. We have to look at other things.

“The nice thing about those metrics is that they are not market-size dependent. If you have 100 customers you can already say what percentage are paying. If it is zero then I can already start to be a bit worried about the model.

“If 10 people in a row hate my product is that statistically significant? It is is not conclusive evidence, but it is certainly telling you something.” [note: this is the validated means to create a minimum viable product or ‘MVP’, one which has been tested and validated using accounting techniques]

Judging from the size of his audience at the Business Leaders Network event on Monday, the buzz afterwards, and the fact that Mr. Ries has had almost 20 meetings in his brief time in the U.K. and Ireland (including a meeting at 10 Downing Street), he is preaching to a receptive audience.

Eric Ries The Lean Startup London 004Photo by marklittlewood1

Update: a couple of things have happened since 16 January:

1. I am attending the lean start-up weekend starting 3rd February to better understand the Ries methodology (and jargon;-)

2. Using insights from the evening and this weekend I am presenting at Cass Business Business School on 13th February on using this approach in building online communities on existing platforms that is, to clarify!