Economic Challenger Issue 72 July-September 2016 | Page 6

increased by only 5 % compared to a 98 % growth in the other top 20 startup ecosystems ( 2013- 2014 ).

EXIT GROWTH RATES

The Silicon Valley ecosystem has captured an astounding 47 % of the value of all startup exits within the top 20 startup ecosystems over the past two years , as much as every other ecosystem combined .

However , the global ecosystem landscape is maturing rapidly . Over the past three years , non- Silicon Valley ecosystems of the top 20 captured 14 % more of the exit value pie ( Silicon Valley captured 55 % in 2012 and 41 % in 2014 ), an especially telling statistic as the pie itself is growing exponentially .

Looking at the relative growth rates of exit value based on a 2013-2014 2-year moving average , we see Silicon Valley growing at a 47 % rate , whereas many other ecosystems further down the index are growing at much faster pace . With the same measure , London has quadrupled and Berlin has grown by a factor of 201 ( due primarily to the two big IPOs of Rocket Internet and Zalando ). Over the coming years we expect Silicon Valley to stay in the lead , even while other ecosystems temporarily grow at a faster pace , with the expectation of ultimate convergence towards an equilibrium that looks a fairly conventional 80 / 20 power law ; i . e . Silicon Valley capturing 30-50 % of the total exit pie , the next 3 startup ecosystems capturing an additional 30- 50 % of the pie and the following top 16 startup ecosystems capturing the remaining 20 % of the total exit pie .

Exit value grew much faster in the top European ecosystems than in the top U . S . ecosystems : 4.1x in Europe versus 1.5x in the U . S . ( 2013-2014 ), yet in 2014 the exit values were still on an average 82 % higher in U . S . ecosystems than in European ones .

CAPITAL GROWTH RATES

Table 1 : The Global Startup Ecosystem Ranking

Total venture capital investment across the top 20 ecosystems rose 95 % from 2013-2014 . The ecosystems with the most high growth in VC were Bangalore ( 4x ), Boston ( 3.7x ), Amsterdam ( 2x ) and Seattle ( 2x ). Meanwhile , Silicon Valley almost doubled up with 93 % growth from 2013 to 2014 , with indications from Crunch base that almost all of the increase in Silicon Valley funding was in late stage Series B and Series C + capital rather than early stage capital , which was relatively stagnant . The increase in late stage capital is aligned with the trend of hyper growth start-ups delaying going public much longer in favour of continuing to rely on private capital , which is far simpler from a legal and regulatory perspective .

The startup ecosystems with the most growth in seed rounds over the last 3 years were Bangalore by 53 %, Sydney by 33 %, and Austin by 30 %, ( all expressed as a 2012-2014 yearly average ). Only one startup ecosystem ' s growth slowed : Moscow . Its average number of seed rounds decreased by 32 % over the last year .

Rank 1 2 3 4 5 6 7 8 9

Berlin

18 Vancouver

4

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