A new report released by Startup Genome, tagged the Global Startup Ecosystem Report (GSER) 2020 has ranked both Cairo, Egypt’s capital city and Cape Town, South Africa as Africa’s number one startup ecosystems, closely followed by Lagos, Nigeria. While Cairo city and South Africa’s Cape Town were ranked 51 in the world, Lagos, Nigeria and Kenya’s Capital, Nairobi were both ranked 61 in the world, signaling a major loss for Africa’s most populous country, Nigeria, which has suffered continued losses in similar reports released recently. The three African cities, however, are the only African startup ecosystems to feature on the Top 100 Emerging Ecosystems Ranking.
“Our ranking this year goes beyond the top ecosystems to include “Emerging Ecosystems” — the next 100 ecosystems after the top ones. As startup culture and entrepreneurship spreads across the world, different ecosystems are gaining relevance and impacting economies in a meaningful way. The factor weights used to rank these ecosystems are slightly different from those used with top ecosystems (detailed in our methodology section) to reflect their emerging status and emphasize the factors that influence more in ecosystems that are just beginning to grow,’’ the GSER report noted.
Here Is What You Need To Know
- According to the report, the top 10 Emerging Ecosystems globally are, in order: #1 Mumbai, #2 Jakarta, #3 Zurich, #4 Helsinki, #5 Guangzhou, #6 (tie) Barcelona, #6 (tie) Madrid, #8 Philadelphia, #9 Manchester-Liverpool, and #10 Research Triangle.
- Combined, the Emerging Ecosystems represent 49 countries and $348 billion in Ecosystem Value.
- Europe is the leading continent for Emerging Ecosystems, with 38 cities in the list followed by North America with 32 startup ecosystems and Asia-Pacific is third with 22 ecosystems.
- Elsewhere, the report noted that the top five global startup ecosystems remain the same, although with some movement within them. Silicon Valley maintains its #1 position. New York remains at #2, although now London is up and tied with it. Beijing is at #4 and Boston is at #5. Among the top five global startup ecosystems, only London was not in the top five in the 2015 ranking. Tel Aviv and Los Angeles follow, both tied at #6.
- The Rise of Asia is more visible this year in the report, with 30% of the top ecosystems coming from the region, compared to 20% in 2012. Of the 11 new ecosystems that made it to the top ecosystems list, six are out of Asia-Pacific.
How The Startup Ecosystems Were Ranked
The report noted that the ranking is primarily driven by one question: In which ecosystems will an early-stage startup have the best chance of building global success?
To determine this, the report based its findings on key broad areas:
Ecosystem Value:
A measure of the economic impact of the ecosystem, calculated as the total exit valuation and startup valuations over a two-and-a-half-year time period.
Exits
The number of exits over $50 million and $1 billion, as well as the growth of exits.
Startup Success:
How much startups succeed in the ecosystem. Measured in early-stage success (ratio of Series B to Series A companies), late-stages success (ratio of Series C to A companies and number of billion-dollar club startups), and speed to exit (both to IPO and other exits)
Using these, it found that:
- Silicon Valley remains the top performer in value creation and exits, with ecosystems like Boston, London, New York City, and Beijing also performing strongly.
- Chinese ecosystems do exceptionally well in the measurement of Startup Success, showing how Chinese startups are able to move onto the next stage of funding with relative ease — for instance, going from Series A to B.
- São Paulo, Salt Lake-Provo, and Delhi punch above their weight in translating successful startups into subsequent high valuation funding rounds.
The report adopted Steve Blank’s definition of a startup as a “temporary organization in search for a repeatable and scalable business model,” thus discounting the notion that a startup must necessarily be technology-driven.
Why Egypt’s Cairo Was Ranked First In Africa
The report noted that Cairo was ranked Africa’s top emerging startup ecosystem because Egypt has 95 million mobile users, the highest penetration in Europe, the Middle East and Africa, including 14 million e-wallets, a young population and several government initiatives aimed at financial inclusion. In 2019, Fawri, a local e-payment provider, filed for an IPO after processing 1 billion transactions worth $3bn. Cairo has several fintech accelerators and funds, including the Central Bank of Egypt’s $58 million fund and Disruptech’s $24 million fund.
The full report can be accessed here.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer