The Center for American Entrepreneurship published the Rise of the Global City: The New Map of Entrepreneurship and Venture Capital measuring startup related activity across major cities throughout the World. The map highlights datapoints including:
- venture activity deals
- capital invested
- number of deals
- deals per 1M residents
- share of global deals as a percentage
- change of deals as a percentage
- contribution to global deals as a percentage.
The report also looks at the share of deals by stage including pre-VC, early, or late stage.
The report emphasizes how venture capital activity shifted from a Silicon Valley phenomenon to major metro economies in Europe and the East. Report authors Richard Florida and Ian Hathaway are both recognized as top thinkers on entrepreneurship in the United States.
The digital version of the report offers helpful top fifty lists such as:
top50 cities for VC deals
- top 50 cities for growth in venture capital deals
- mega deals $500 m +
- top 50 cities of VC investment per capita.
The per capita measure is a helpful indicator to understand how different investment is across cities. For example, San Francisco’s VC investment per 1M residents is 17,458 USD between 2015-2017. San Francisco clearly ranks number 1 for VC investment. Examples of other cities include Helsinki, ranked 38th at 718 USD per 1M residents, Manchester at $619 and Dubai at $598.
Ranked #4 is Boulder, Colorado at $3,676. Boulder is the “startup community,” one of the early cities to emphasize the communities that form around founders, investors, and the entrepreneurial ecosystem. Cambridge, UK is ranked 10 at $2,110 per 1M residents. Cambridge is known for their high tech cluster and research spinning out of Cambridge, Silicon Fen.
Typology of Startup Hubs
Florida and Hathaway outline a new typology of global startup hubs that rank characteristics of the hubs ranking from Advanced, Elite, Distinguished, or Super-stars.Tier 1 hubs include San Francisco, Beijing, Boston, London, LA, and New York. Using that typology, the authors look at the percentage of global deals and global capital invested. San Francisco is a giant in terms of VC with 13% of all global 21% of global capital invested during 2015-2017.
The report also looks at emerging global startup hubs. There are three typologies associated with emerging hubs. Next Cities include Cincinnati, Moscow, and Nashville. Little giants include Madison, Reykjavik, and Waterloo. Global Gazelles includes Ahmedabad, Bangkok, Lagos, Manilla, Nairobi, and Sofia.
Richard Florida has chronicled regional inequality and how access to capital is a driver of regional inequality in the new economy. The authors draw a number of conclusions:
- Startup activity is global.
- The globalization of startups is a local phenomenon. This harkens back to Harvard Business and Economic Scholar Stephen Porter’s famous research that value of the global economy is in the local. Companies receive technical assistance and investment from local actors.
- The globalization of startup activity is “clustered, concentrated, and spiky.” Larger cities have a significant advantage in forming capital. They have concentrations of talent and specialization networks.
- The fourth conclusion is that global startup hubs are taking root in the largest and most economically powerful cities. This is another form of geographical concentration that is something to be skeptical about.
- The fifth takeaway is a new typology of global startup hubs, which may be valuable in the sheer volume of data and analysis that is being applied to startup communities and startup ecosystems. Since there is a divergence in local ecosystems in terms of talent, capital,non-capital resources, research capabilities, among others.
The Center for American Entrepreneurship is one of the most promising new organizations forming around entrepreneurship research.