Current State of the Global Startup Ecosystem
The global startup ecosystem has evolved significantly.
All over the world, agile teams are tackling real-world challenges and operational inefficiencies in new ways. VC funding is flowing more freely than ever in parts of the world that have historically struggled to raise capital.
Silicon Valley is no longer the only birthplace for revolutionary products and services. And founding teams are more diverse than ever.
With the start of a new decade, we wanted to survey the current state of the global startup community to get a sense of where we are and where we’re going.
Global Startup Trends and Economic Value
Today, there are more than 470 million entrepreneurs worldwide.
Every year, people start 100 million new companies. Most in existence today are located in the US or China. However, Latin America had the highest rate of startup employment worldwide in 2017. In Guatemala, nearly 30% of the population works in nascent businesses.
According to Valuer, the top five best cities for startups in order are Berlin, Tel Aviv, Helsinki, Stockholm, and Bengaluru. Several cities in Asia and South America also received nods as some of the healthiest ecosystems for new startups.
Between 2017-2019, startup companies were responsible for $2.8 trillion in economic value. The most valuable startup in the world is China’s ByteDance, which is currently valued at $75 billion.
Today, there are over 390 privately held companies (“unicorns”) valued at over $1 billion. Half of these businesses operate in the US, and one-fourth are in China. The UK and India are each responsible for 5% of the current unicorn pool.
Although the US still leads the way on many startup-related metrics, the rest of the world is catching up quickly. There are now numerous cities across multiple continents that cater well to young businesses.
Technology-focused Startups Leading the Way
Modern startups are addressing challenges across a wide range of sectors.
However, a few industries are getting more attention than others, especially those related to technology services and products. The internet, big data, and AI have all enabled nimble teams to innovate and disrupt larger sectors.
Globally, fintech companies account for 12% of the current unicorn portfolio. The E-commerce, D2C, SaaS, and AI categories trail slightly behind at 11% each.
Y Combinator’s recent cohorts indicate that there is significant interest in the US for SaaS, healthcare, consumer goods, fintech, and consumer media businesses. In China, fintech, blockchain, and ridesharing companies are all finding success. Many startups in India are focusing on education, lodging, insurance, and logistics.
In the 2020s, we’re likely to continue seeing a disproportionate amount of startup activity related to innovative tech services and products.
Capital Funding Still Rising
Startup funding continues to trend upwards.
Both the number of annual deals and deal sizes have increased rapidly, with much of the focus shifting away from the US. In the mid-1990s, 95% of venture capital went to US-based companies. That figure has since dropped to 50%.
Last year, Indian tech scale-ups raised $14.5 billion, a record-breaking amount of funding for the country. Between 2015-2017, VCs invested $24 billion in Beijing-based startups and $5 billion in London-based companies on average each year.
Overall, the number of global venture deals is up 73%, and capital investments are up 231% since 2005. Crunchbase predicted that VC funding would come in at $76 billion across 9,100 deals for Q3 2019 alone.
Access to capital is no longer consolidated to a few hubs. Founders are winning investments all over the world, which means innovation is more spread out than ever before.
What Does This Mean for Startups in the 2020s?
For those who manage early-stage, high-growth businesses, it’s important to recognize the increasingly competitive nature of the startup world. Despite there being more investment and activity, 90% of startups are still unsuccessful. Seven out of ten fail between years two and five of operation.
Competition for talent and funding is high. Therefore, it’s critical to clearly articulate why your vision and business model is unique. Otherwise, you will struggle to attract A-list candidates and keep them interested in what you are doing.
At Funded.club, we help startups and scale-ups hire the right people so that they can rise above the competition without getting bogged down by inefficient recruiting efforts. We understand the challenges of running a growing, young business - you are flying the plane as you build it.
We know you don’t have time to sift through resumes or have the luxury to settle for less-than-perfect hires. Outsource your recruiting efforts until you are ready to build an in-house team.
That way, you know you’re getting the best of the best, and you can focus your time and energy on scaling your game-changing business correctly.
If, like us, you believe in rainbows, unicorns, 10x developers and hungry sales hackers, come and join our club! Start a chat or book a call to receive free hiring tips from startup veterans with >20 years experience in HR and recruiting.
Ray Gibson is founder and CEO of Funded.club. He brings 20 years of experience in recruiting across Europe, North America and Asia and 5 years running his own startups.