StartupBlink has just released the Global Startup Ecosystem Index Report of 2024 which analyzes this year’s trends in the Startup sector.

The report, which ranks the ecosystems of 1,000 cities and 100 countries, shows that the United States is reinforcing its lead on other ecosystems mainly due to the AI boom.

Here are the most important insights of the StartupBlink Global Startup Ecosystem Index Report of 2024:

1. Ecosystems

At the global level, the United States maintains its undisputed reign, with a substantial lead, nearly four times that of the United Kingdom at second place. The 5 top stops rank had a total score of 215.001 (US), 55.995 (UK), 51.557 (Israel), Canada (38254) and finally 37.736 (Singapore).





Country Insights:

• Singapore has had meteoric rise, climbing to the top 5 in the country rankings, up from 16th in 2020. The development policies and strategies there are highly effective. Altough not reaching the 5 top stops, Sweden also rose from 10th to 6th place in the same time frame. The top 4 countries (US,UK, Israel and Canada) maintained their ranking form one year before.
  
  
• China has been declining since 2021, droping from 7th to 13th place. In 2019, Beijing was seen as the only potential city that could surpass Silicon Valley within ten years. This is no longer the case. The Beijing ecosystem is now ranked 6th globally, and China is no longer in the top 10 countries. Despite being a great ecosystem, without global expansion, China won't break into the top 3.
  
  
• Several countries have shown significant progress this year, including Switzerland, Estonia, India, UAE, Colombia, Cyprus, and Azerbaijan. Paraguay has entered the top 100 for the first time.
  

Top 30 Country Ranking:

This year, the cities in the global top 10 remained largely unchanged, with the exception of Tel Aviv and Paris, which swapped places, now ranking 9th and 10th, respectively.





City Insights:

• Silicon Valley's/San Francisco continues to lead the global startup ecosystems. After years of decline, Silicon Valley has widened its lead over other ecosystems. In 2023, it was 2.5 times better than New York; in 2024, it is now 2.8 times better. This growth is significantly driven by its leadership in AI.
  
  
• New York, which has held the second position since 2017, also stands in a league of its own. With a total score 1.7 times higher than London (ranked 3rd), New York maintains a significant score gap that will be challenging to close.
  
  
• Shanghai, the second-ranked Chinese ecosystem, held steady at 7th globally, though it remains significantly behind the top 6 cities in total score, positioning it closer to lower-ranked ecosystems.
  
  
• In 8th place, Bangalore, India's leading ecosystem, also maintained stability, despite the slight widening of its score gap with Shanghai
  
  
• Other cities that are demonstrating notable growth and momentum include Austin, Seoul, Mumbai, Miami, Barcelona, Jakarta, Sofia, Dubai, Cairo, and Riyadh. Arab countries, in particular, are showing positive trends in their startup ecosystems.
  

Top 30 City Ranking:

2. Funding

Last year there was a significant drop in funding following a record-breaking year in 2021. In 2023, investment levels reached a five-year low. This downturn has impacted all funding stages, with early-stage investments experiencing the most significant decline.
As of the first quarter of 2024, this downward trend shows no signs of reversing. According to Crunchbase, the global startup funding market has seen its second-lowest level since early 2018.

3. Unicorns

Unicorns are still being created, but at a much slower pace compared to previous years. This contrasts sharply with the rapid growth seen in 2021 when the number of new unicorns increased by over 200%.

From November 2023 to April 2024, Crunchbase data showed that the number of new unicorns has remained in the single digits for six consecutive months.

4. IT Sector Layoffs

The International Labor Organization (ITO) expects an additional two million workers in the IT sector to be seeking jobs globally in 2024, indicating a rise in unemployment rates.

With worsening economic conditions, a global decline in startup funding, and the rise of AI, there has been an increasing trend of layoffs in the IT and startup sectors. These layoffs are primarily affecting the tech industry, diminishing the appeal and economic impact of startups after years of being a dominant force in the global economy.

5. Healthtech

Although the pandemic initially boosted the Healthtech industry, its growth slowed in the post-pandemic period. However, Q1 2024 saw a notable 48% increase in Healthtech funding quarter-over-quarter, with mergers and acquisitions nearly doubling in Q4 2023, according to CB Insights. This indicates that the industry is experiencing consolidation.
So it seems that the Healthtech sector is back in the spotlight.

6. Web 3.0

Despite initial enthusiasm for blockchain technologies and their use in cryptocurrencies and NFTs, the Web3 (Web 3.0) industry faced a significant downturn in 2022 and 2023. This period was marked by the collapse of crypto-friendly banks and the downfall of FTX, one of the largest global cryptocurrency exchanges.

Last year's report highlighted that the decline in Web3 funding in 2022 was significantly steeper than the overall decline in startup funding. In 2023, the situation did not improve, with Crunchbase reporting a 74% year-over-year drop in funding for Web3 startups.

However, the first quarter of 2024 saw the first quarterly increase in Web3 venture funding since Q4 2021, mainly due to Bitcoin's rise, which seems to be sparking renewed hopes for the industry's revival.

7. Metaverse and VR

It is now evident that the anticipation of the Metaverse and VR as the next game-changers was premature. According to Crunchbase data, funding in the Metaverse and VR industry hit an all-time low in 2023.

While the potential for extraordinary innovation remains, the industry has yet to deliver solutions that truly integrate into the economy and drive mass adoption. An example of this is Meta’s announcement of further job cuts related to the Metaverse project to refocus on AI.

Apple’s launch of the Vision Pro headset in early 2024 emphasizes "spatial computing" over terms like "metaverse" or "virtual reality." This device aims to mitigate the isolation and discomfort often associated with virtual reality technologies. If successful, it could reignite interest in immersive digital worlds among startups. However, due to its high initial costs, it is expected to remain a niche product.

8. Semiconductors

Geopolitical shifts and increased risks have propelled certain strategically important industries into the spotlight. The growing adoption of AI technologies has underscored the critical role of semiconductors, with companies like Nvidia achieving record revenues due to their focus on generative AI and accelerated computing.

The semiconductor industry's growth is exemplified by several key events from late 2023 and early 2024, such a Nvidia's exceptional growwth performance against the "Magnificent 7" tech giants, as well as the Dutch semiconductor company ASML which reported record orders in Q4 2023.

Final Notes

The report emphazises that 2024 has been undeniably a challenging year for the global startup ecosystem. The funding landscape has entered a deeper 'winter,' with a high-inflation, high-interest rates and a significant tightening in capital availability for startups.

The current financial constriction coincides with heightened geopolitical tensions and a noticeable retreat from globalization. These factors collectively mark a stark departure from the previously more integrated global ecosystem, ushering in an era characterized by distinct clusters shaped by regional geopolitical dynamics.

In the current climate, the decision of where to establish a startup ecosystem has become more crucial than ever. As capital becomes increasingly concentrated in specific geographic regions, startups must strategically select their locations to access essential resources and funding opportunities.

Choosing the right ecosystem is not just about securing financial support; it's about positioning in a location that can sustain growth during unstable economic and political times.

Founders and stakeholders should carefully evaluate potential ecosystems, considering both immediate benefits and long-term stability, to ensure their projects can survive and thrive in evolving conditions.




The full StartupBlink Global Startup Ecosystem Index Report of 2024 report can be accessed here.