Last year was the first time SparkLabs revealed our rankings for the top 10 startup ecosystems in the world here on VentureBeat. Now I’m excited to present our update for 2016.
The top 10 haven’t changed, but there has been movement within the rankings. Los Angeles has jumped two spots up, replacing Seoul in the number five spot. This step up was driven by the increase in the number of unicorns and exits from Oculus to Dollar Shave Club to Snapchat’s impending IPO.
All this recent momentum of success could permanently change the LA startup landscape in two ways. First, it creates a base of angel investors who can actively engage and fund the next wave of new entrepreneurs and startups in LA. Second, success attracts talent. This strong momentum along with the higher (outrageous) cost of living in the Bay Area will lure some of Silicon Valley’s top talent down to LA and will make LA an option for others in the U.S. and across the globe. It will be interesting to see how the LA startup ecosystem develops over the next few years.
To find this top 10, we looked at eight factors: Funding Ecosystem & Exits, Engineering Talent, Active Mentoring, Technical Infrastructure, Startup Culture, Legal & Policy Infrastructure, Economic Foundation, and Government Policies & Programs.
Here are the cumulative scores (out of a total possible 80 points) for each of the top 10 startup cities:
Silicon Valley continued to strengthen its top position with a two point increase to 77. More exits, more IPOs, more “hot startups” equals two points. You really can’t become any more perfect than 77 out of 80 points. Los Angeles increased 6 points from 57 to 63, and Beijing increased 4 points from 55 to 59.
Beijing like Los Angeles jumped two spots from 8th to 6th. Beijing continues to be the best startup hub in Asia and is strengthening its position for the future, such as by heavily investing in AI.
Of the eight factors we considered to reach these scores, some are “soft” factors that are difficult to quantify but that have real consequences. Trust between members of a founding team, for example, is essential. It is also very difficult to quantify, and yet breakdown of trust and chemistry is the cause for many startups.
As John Doerr, Chair of Kleiner Perkins, puts it, “You must ask, ‘Are these the people I want to be in trouble with for the next 5, 10, 15 years of my life?’ Because as you build a new business, one thing’s for sure: You will get into trouble.”
Similarly, the cultural ethos of an ecosystem is critical. The “pay it forward” culture has been cited numerous times as the “secret sauce” of Silicon Valley and why its startup environment is so difficult to replicate. This is something that can be developed but will take time. For our affiliated accelerators in Asia, we have taken a long view and mission towards bringing the “pay it forward” culture to the startup ecosystems in Seoul, Beijing, Singapore, and throughout Asia.
On the heels of our top 10 list, we see up and coming startup ecosystems continuing to develop further, such as Paris, Singapore, Chicago, Shanghai, and others. What startup hubs are you active in? What do you see as the next up and comers?
Bernard Moon is cofounder and General Partner at SparkLabs Global Ventures, a new global seed-stage fund, and cofounder of SparkLabs, a startup accelerator in Seoul, Korea. Follow him on Twitter.