Startup Genome Report 2018 – Executive Innovation Report
There are an estimated 300 million startups around the world, and many of these are attracted to startup clusters that benefit from what James Liang refers to as the agglomeration effect in his latest book The Demographics of Innovation. It sees a concentration of skills, finance and connections converge in a location to help startups in a particular industry to grow.
It’s a trend that was evident in the latest report from Startup Genome. The Global Startup Ecosystem provides an overview of the global startup landscape and highlights how the best startups are no longer concentrated in globally renowned hubs, such as Silicon Valley for technology, Boston for medtech and London for fintech, but rather spread around the globe, with smaller, less glamorous locations proving that specialization can allow them to thrive.
The report, which was based upon data from over 1 million startups spread across nearly 100 cities around the world, explored the health and robustness of both these historic and burgeoning ecosystems. It revealed that the latest wave of startups are ‘deep tech’ firms that specialize in areas ranging from cybersecurity to AI, medtech to blockchain. These startups are increasingly built to solve real-world problems, with their host cities becoming a platform for innovation.
“The foundation for startups in this new era of tech comes in no small part due to global growth in research and development (R&D),” the authors say. “Patent applications have grown by an astounding 174% in the past 20 years, with R&D spending as a share of the GDP growing by 13% in the same time period.”
The hottest growth areas for startups were:
- Advanced manufacturing and robotics
- Artificial intelligence
The increasingly specialized nature of the startups has allowed hubs to emerge in smaller, less heralded cities than was perhaps the case in the past. This allows them to gain a march on larger hubs that cannot possibly be all things to all people, even with their scale advantages.
“In this new era of tech, one strategy for smaller ecosystems to increase their footprint is to focus on specific sub-sectors in either verticals or deep tech areas where they have existing strengths,” the authors explain.
For instance, Frankfurt has pursued this strategy to develop a burgeoning fintech scene. Indeed, the cluster has the highest concentration of startups in any sub-sector around the world.
Insights for startup founders and ecosystem builders
With such a rich database of startups to work from, the report has a number of invaluable tips for startup founders:
- Know yourself, and especially your attitudes and inclinations
- Seek co-founders who complement these preferences
- Aim high and think big
- Evolve with your startup rather than applying rigid thinking
- Find a good coach to support and mentor you
If you’re looking to build an ecosystem of startups, the report has the following tips:
- Don’t try to change the founders, but rather support them to grow
- Have a broad church, with your programs and activities supporting a wide range of attitudes, mindsets and behaviors
- Take an objective view of what accelerators and incubators offer to startups and whether they actually succeed in helping them grow
Meanwhile, if you’re looking to find, back or partner with a winning startup, the report offers three characteristics that they believe underpin every good startup (and two that don’t):
- Initiation, and especially the proclivity and energy level to turn ideas into action.
- Reflection and patience, with the best founders capable of pausing for thought rather than rashly following every path.
- Breadth of thinking, and a preference for general overviews and big picture perspectives.
By contrast, a preference for details, specification and concrete thinking was associated with a high risk of startup failure.
As was a preference for planning and organizing before starting a task, although this can be useful for the latter stages of growth.
With so many startups springing up in so many different places, it’s increasingly important that help is provided to locate and filter the best startups to work with or invest in.
The DealMatrix platform is the digital innovation scouting platform helping you with intelligence, structure and insights while you search for the right startups.
Connect with startups and collect detailed profiles about them to evaluate them using our best practice business score cards and your specific industry criteria. Manage your innovation funnel efficiently in one system with all stakeholders and run multiple opportunities for startups such as challenges, batches, corporate innovation programs and many more.
Contact us today for more information.