The idea that to be a successful entrepreneur requires a Silicon Valley based operation is a thing of the past. In 2011, three entrepreneurs — Bjoern Herrmann, Max Marmer and Ertan Dogrultan — set out with bold ambitions to find out exactly what it takes for a tech start up to be successful. The Startup Genome Project was conceived to crack the innovation code and increase the success rate of startups.
According to Wired.com, in September of 2011, Herman, Marmer and Dogrultan launched the Startup Compass. The Startup Compass is a platform used by more than 13,000 companies as a benchmarking tool to evaluate their performance, align their team and better allocate their product development and customer acquisition resources. With the data compiled, the founders believe they can begin comparing startups to better understand how they become successful.
Over the last five years, web and tech industries have matured, which means it now costs less than ever before to launch a viable business. This has caused an explosion in the number of software companies created, as a result, new ecosystems are popping up all over the globe to help grow these fledgling companies grow as well as spur regional economic growth.
Currently, the three most popular ecosystems worldwide are Silicon Valley, New York City and London.
Silicon Valley: Biggest throughput. Strong early stage funding. More mentors. Most ambitious people. High risk.
New York City: Diverse. Niche focus. Marketplace and social network focus. High risk.
London: Well educated. Bet big on perceived proven winners. Project management / e-commerce focus. Low risk.
- Startup Throughput: Unsurprisingly, Silicon Valley’s startup ecosystem continues to lead the way, but the gap is growing smaller every year as tech centers like New York continue to ramp up growth rates. This is probably due to New York’s growing “Silicon Alley” (as it is now called), which serves as a formidable rival to its west coast counterpart. Secondly, NYC’s Mayor Bloomberg has put forth alluring opportunities for entrepreneurs, including Cornell’s soon-to-be NYC engineering campus.
- Startup Success Rate: Proportionally, the Silicon Valley ecosystem has 22% more companies in the “scale stage” than in NYC and 54% more than in London.
- Availability of Capital: On average, Silicon Valley startups raise two to three-times more money in the first three stages of development: Discovery, Validation, and Efficiency. But in the scale stage, compared to Silicon Valley, New York City startups raise 27% more money and London startups raise 30% more. These statistics are contingent upon the Venture Capital market, which has also evolved in recent years and continues to adapt to accommodate new ventures.
- Job Creation: In the Efficiency and Scale stages, Silicon Valley startups create 11% more jobs than NYC startups and 38% more jobs than London startups.
- Risk Profile: New York City has a larger number of high risk companies and 4x more high risk companies in the “scale stage” than Silicon Valley.
- Product Types:
- Games: Silicon Valley entrepreneurs are 2x more likely to build this than in NYC
- Marketplaces: NYC entrepreneurs are 50% more likely to build this than in Silicon Valley
- Social networks: Silicon Valley entrepreneurs are 23% more likely to build this than in NYC
- Infrastructure: Silicon Valley entrepreneurs are 3.5x more likely to build this than in NYC
- Financial tools: NYC entrepreneurs are 2.5 times more likely to build this than in Silicon Valley
- Ecommerce: London entrepreneurs are 50% more likely to build this than in Silicon Valley
- Social products: London entrepreneurs are 35% less likely to build this than in Silicon Valley
- User-generated content: London entrepreneurs are 3.5x less likely to build this than in Silicon Valley
- Project management software: London entrepreneurs are 2x more likely to build this than in Silicon Valley
- Market Type:
- Silicon Valley: 13% more likely to tackle new markets than London entrepreneurs
- London: 21% more likely than entrepreneurs in Silicon Valley to tackle existing markets with better products
- New York: has the highest proportion of companies trying to re-segment existing markets with niche products. They are 30% more likely to build something niche than entrepreneurs in London.
- Market Size:
- Entrepreneurs in Silicon Valley: much more “ambitious” than entrepreneurs in New York City and London
- 22% more likely to estimate their market size as greater than 10 billion compared to New York City entrepreneurs and 120% more likely than entrepreneurs in London.
- They are also almost 2x less likely to estimate their market size to be less than 100 million.
- Thought Leaders:
- Silicon Valley: Steve Blank and Paul Graham are the most popular startup experts.
- London: Paul Graham is by far most popular expert.
- NYC: Fred Wilson was voted as a startup expert hometown favorite.
- Work Ethic: Companies in Silicon Valley work 35% more than companies in New York City. In Silicon Valley teams work 9.5 hours a day on average vs. 8 hours in London and 7 in New York City.
- Founder Education Background:
- London: most founders have a masters degree.
- Silicon Valley: most founders have just an undergraduate degree.
- NYC: has 2.2x more founders with Ph.Ds than Silicon Valley.
- Founders: The average age of founders in all three ecosystems is about the same, with an aggregate average of 33.5, but NYC has almost double the amount of female founders.
- Founder Motivation:
- Silicon Valley: 30% more founders that want to change the world compared to those in London or New York.
- New York: 50% more founders that want to make a good living compared to those in Silicon Valley or London.
- London: 2x as many founders that want to make a quick flip compared to those in Silicon Valley or New York.
TOP 10 Startup Ecosystems
- Silicon Valley (San Francisco, Palo Alto, San Jose, Oakland)
- New York City (NYC, Brooklyn)
- Tel Aviv
- Los Angeles
- Sao Paulo