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Scaling Secrets Exposed: Startup Genome Report Delivers Game-Changing Insights

September 22, 2023

In a momentous unveiling at the Global Entrepreneurship Congress in Melbourne, the Startup Genome has introduced “The Scaleup Report,” a definitive exploration of the intricate factors that propel startups toward the illustrious realm of scaleups. Presented by JF Gauthier, the Founder and CEO of Startup Genome, this report unravels the enigma behind what distinguishes prosperous scaling startups from those that falter. Moreover, it proffers practical insights of immense value to entrepreneurs, enterprise support organizations, and policymakers fervently endeavoring to elevate the proportion of startups achieving the coveted $50 million+ valuation.

JF Gauthier, the Founder and CEO of Startup Genome

This groundbreaking report derives its strength from an unparalleled treasure trove of data sourced from the most exhaustive dataset on startup ecosystems. This rich resource harnesses the wisdom accrued over a decade of rigorous longitudinal research, scrutinizing hundreds of objective metrics associated with tens of thousands of startups that have participated in Startup Genome’s comprehensive founder survey. Enriched further by contributions from eminent thought leaders, including the Global Entrepreneurship Network and Dealroom, the report stands as a testament to over a decade of independent research, assessment, and policy strategy work undertaken by Startup Genome.

Key revelations from “The Scaleup Report” are as follows:

Founders’ Strategy for Scaling: Founders aspiring to enhance their prospects of scaling must ensure they offer stock options to all employees, cultivate more than five global connections to top ecosystems, and enlist at least three advisors for their nascent ventures.

Local Connectedness and Revenue Growth: Startups wielding a Local Connectedness Index score of 6 or above achieve a 5.1% scaleup rate, a significant boost compared to the 3.8% rate for those scoring 2 to 4. Higher Local Connectedness correlates with revenue growth that’s twice as rapid.

Global Connectedness and Scaleup Success: Scaleup success directly correlates with Global Connectedness, with highly connected startups boasting a 3.25x higher chance of scaling. Ecosystems deeply intertwined with top global counterparts, such as Silicon Valley, New York City, and London, see their startups attain global prominence at a substantially higher rate.

Global Scaleup Leaders: The United States, China, and the United Kingdom reign as the top countries by the number of total scaleups, with the U.S. leading the pack with 7.1K scaleups — 4.8x more than China and 11.5x more than the U.K. India, Canada, Germany, Israel, France, South Korea, and Singapore follow closely.

Venture Capital Investment: Top countries for VC investment in scaleups include the U.S., China, India, the U.K., and Germany. North America commands a lion’s share, contributing to 55% of global VC investments in scaleups, with the U.S. alone accounting for 53%.

Global Expansion and Revenue Growth: Early-stage startups with a global customer base (more than 50% foreign customers) experience revenue growth that is twice as swift as those without. For non-U.S. startups targeting the global market initially, the scaleup rate doubles.

B2B and Global Focus: B2B and mixed startups that set their sights on the global market from the outset enjoy higher scaleup rates than B2C startups. B2B startups that initiate global targeting from day one achieve a remarkable 6.8% scaleup rate.

Serial Founders and Motivation: A third of all current scaleups are founded by serial entrepreneurs, who exhibit an 85% higher scaleup rate compared to their counterparts. Founders driven by a desire to accumulate wealth exhibit the strongest correlation with scaleup success, followed by a desire to effect change and create exceptional products.

Funding Sources: Founders relying on friends for funding are more likely to foster scaleups than those with personal or family resources.

Age Bracket and Scaleup Success: Scaleup success tends to peak among founders in the 26–40 age bracket, both in terms of scaleup rate and the absolute number of scaleups.

JF Gauthier, the visionary Founder & CEO of Startup Genome, aptly remarks, “The quintessential billion-dollar question has always been what characteristics, behaviors, and decisions of early-stage startups significantly increase your chance of success at scaling.” The Scaleup Report, a product of 11 years of exhaustive primary research involving nearly 100,000 startup founders globally, provides empirically grounded answers to this pivotal question.

Jonathan Ortmans, Founder and President of the Global Entrepreneurship Network, acknowledges, “The Global Entrepreneurship Network is proud to partner with Startup Genome on groundbreaking new research in The Scaleup Report to equip policymakers, investors, and support organizations with a timely, independently-verifiable way of identifying scaleups.” He further affirms the report’s role in delineating the critical success factors that set apart flourishing scaleups.

Yoram Wijngaarde, Founder & CEO of Dealroom, emphasizes, “The data shows definitively that startups can scale anywhere in the world.” He underscores that the pace of global distribution in entrepreneurship and venture investing is accelerating, marking the advent of a global innovation era.

To delve deeper into this comprehensive report, access it in its entirety at Scaleup Report (available since September 20).

scaling startup secrets scaling startup secrets scaling startup secrets

Kenya’s Untapped Global Raises $3 Million Seed Round for Its Real-Time Data Platform

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard

Cape Town Displaces Lagos As The Most Valuable Startup Ecosystem In Africa — New Report

September 22, 2021

Lagos, Nigeria’s commercial capital, has given way to South Africa’s Cape Town as the top startup ecosystem in Africa, according to the latest Global Startup Ecosystem Report released by Startup Genome, in partnership with the Global Entrepreneurship Network. According to the report, African ecosystems are now worth $6.6 billion in total. Cape Town, Lagos, Johannesburg, Nairobi, and Accra account for $6 billion of that total.

*JF Gauthier, Founder & CEO of Startup Genome*

“Entrepreneurs, policymakers, and community leaders in Africa have been working hard to build inclusive innovation ecosystems that are engines of economic growth and job creation for all,” said JF Gauthier, Founder & CEO of Startup Genome. “The Global Startup Ecosystem Report is the foundation of knowledge where we, as a global network, come together to identify what policies actually produce economic impact and in what context.”

With data from over 3 million companies across 280 ecosystems, the Global Startup Ecosystem Report (#GSER2021) claims it is the world’s most comprehensive and widely-read research on startups. The report lists the top 30 worldwide ecosystems and the top 10 runner-up ecosystems, as well as a top 100 list of emerging ecosystems.

For the 2021 rankings, Global Startup Ecosystem Report rated ecosystems across seven performance indexes. They are: Performance; Funding; Market Reach; Talent & Experience; Connectedness; Knowledge

Here Is What You Need To Know

According to the report, the average amount of early-stage funding in African startup ecosystems during the GSER period was $46.5 million, more than double the amount seen the previous year.

Fintech dominates early-stage investment in Africa, according to the research, with over $206 million spent in the Sub-Sector between January 2018 and June 2020.

It claims that the overall exit value in Africa was over $1.1 billion, with Cape Town, Johannesburg, and Durban topping the list.

The research also lists Kampala, Abuja, Durban, and Kigali as Africa’s top regional challengers in that order.

Lagos Comes Back Top In Africa On The Top 100 Emerging Ecosystems Ranking

Despite falling behind Cape Town in terms of valuation, Lagos still ranks first in Africa among the Top 100 Emerging Ecosystems worldwide. Last year it was third in Africa, behind Cairo and Cape Town.

Startup Genome assesses over 275 ecosystems across over 100 countries to rank the top 30 globally, runners-up, and since 2020, the top Emerging Ecosystems.

The top Emerging Ecosystems are still at their earliest stages of growth.

In the ten years between 2011 and 2020, the Top 100 emerging ecosystems spawned 124 billion-dollar startups, with 53 ecosystems accounting for the bulk. The Top 100 Emerging Ecosystems have a total ecosystem value of approximately $540 billion, up 55 percent from last year, according to the report.

In Africa, Lagos is ahead of Cairo which places second. Nairobi, Kenya is third, while Cape Town, South Africa, ranks fourth in Africa and 81st in the world.

This year, Mumbai rose to the top of the Emerging Ecosystems list once more. In terms of performance, funding, experience, and talent and experience, it outperformed all others.

Global Performance

Despite a difficult year for many, the top five global startup ecosystems remain at the top, with Silicon Valley topping the list for the second year in a row, followed by New York City and London, which are tied for second place.

At #4 and #5, respectively, are Beijing and Boston.

North America continues to lead the Global Rankings, with 50 percent of the Top 30 ecosystems originating from this region, followed by Asia with 27 percent and Europe with 17 percent.

One new entrant to the Top 10 global startup ecosystems is Tokyo, which is now ranked #9, up six spots from last year. This is partly due to a rise in the number of successful exits in Tokyo, which has resulted in an increase in the ecosystem value of the city.

In addition to Tokyo, three other ecosystems have risen through the ranks: Shenzhen has reached the Top 20 at #19, Philadelphia has risen 15 places from #43 to #28 this year, and Salt Lake-Provo has entered the Top 30 at #30.

Other than Tokyo and Philadelphia, the largest movers this year are Toronto-Waterloo, which jumped four spots from #18 in 2020 to #14, and Seoul, which jumped from #20 in 2018 to #16 this year.

This year sees two new entrants to the Runners-Up list — Research Triangle (the Raleigh-Durham-Chapel Hill area of North Carolina, USA) and Dublin, Ireland.

For more on the report, visit https://startupgenome.com/report/GSER2021

Cape Town startup ecosystem Africa Cape Town startup ecosystem Africa

Why Lagos Is The Most Valuable Startup Ecosystem In Africa

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

New Startup Genome Report Shows 41% Of Global Startups Have Less Than 3 Months Of Cash

April 23, 2020

Startup Genome shows how many startups are in trouble.

Startup Genome has reported that 41% of global startups have less than three months’ worth of cash available. That’s one of the grim statistics of the pandemic, and it suggests the startup ecosystem is fragile.

The report was based on a survey conducted by the Startup Genome, which interviewed 1,070 respondents across 50 countries from March 25 to April 17. Startup Genome CEO J.F. Gauthier and chief innovation officer Arnobio Morelix wrote the report.

The red zone

Above: Startup Genome survey says fundings are slowing down. Image Credit: Startup Genome

The survey found 41% of startups globally are threatened — in what the report called the “red zone” — with only up to three months’ worth of cash runway left. Many very young startups have only a few months’ worth of cash — 29% were already in that situation before the crisis — but the pandemic put 40% more of them into that precarious position.

Focusing on startups that have raised series A, B, or later rounds, 34% have less than six months’ worth of cash — a danger zone in the current situation, as fundraising has become more difficult.

Of startups that had a term sheet before the onset of the crisis, nearly 20% have had the term sheet pulled by the investor and 53% have seen the process slow down significantly or have faced an unresponsive lead investor. Only 28% have had the process continue normally or secured the funds.

Talent and jobs

Above: Startup Genome says most startups are cutting jobs. Image Credit: Startup Genome

Since the beginning of the crisis, 74% of startups have had to terminate full-time employees, while 39% of all startups have had to lay off 20% or more of their staff and 26% have had to let go of 60% of employees or more. When the share of startups that had to terminate full-time employees is broken down by the top three continents for startup activity, North America has the biggest share of companies reducing headcount (84%), followed by Europe (67%) and Asia (59%).

Meanwhile, 74% of startups have seen their revenues decline since the beginning of the crisis. The most common type of change in revenue is a relatively modest decline. However, a sizable share of companies were very heavily hit: 16% of startups saw their revenue drop by more than 80%. A major reason for the drops in revenue is the effect of the crisis on industries those startups serve. Three out of every four startups work in industries severely affected by the COVID-19 pandemic.

Market growth

Above: Startup Genome says most companies can still operate in the pandemic. Image Credit: Startup Genome

At the same time, a small minority of companies are actually experiencing growth. In fact, 12% of startups have seen their revenue increase by 10% or more since the beginning of the crisis, and one out of every 10 startups is in an industry that’s actually experiencing growth. Indeed, every crisis creates opportunities. For instance, over half of Fortune 500 companies started during a contraction, and over 50 unicorns were created during the Great Recession alone, as Startup Genome data shows. The COVID-19 crisis will likely prove no exception.

But the damage and growth are not evenly distributed. On the positive side, B2C startups are about 3 times more likely to be in industries experiencing growth during the pandemic compared to B2B startups. On the negative side, B2B startups serving large enterprise clients are more likely to be in industries adversely affected than B2B startups serving small and mid-sized enterprises, and B2C startups are the least likely to be experiencing an increase in sales.

Operations and management

Above: Startups are slashing expenses. Image Credit: Startup Genome

Over two-thirds of startups have reduced their expenses since December 2019, with the lion’s share of those making relatively small cuts. Some companies, however, cut costs very aggressively, with more than one out of every 10 companies cutting costs by over 60%. Out of those startups cutting costs, 76% have started making cuts since the beginning of March — indicating that most of the cost-cutting is directly related to the pandemic.

Nonetheless, tech startups are uniquely situated to continue operating even in lockdown scenarios. Unlike many traditional businesses, 96% of startups responded that they have continued working during the crisis, even if they are experiencing significant disruption.

Policy suggestions

About 38% of startups have not received assistance and do not expect to be helped by policy relief measures related to the pandemic. At the same time, 16% are not currently supported but expect to be helped by a policy measure soon. The remaining 46% of startups are currently receiving some form of assistance.

Executives say the top four most helpful policy responses for their businesses would be:

Grants to preserve company liquidity (29%)
Instruments to boost investment (18%)
Support to protect employees, like payroll supplementation grants (17%)
Loans to preserve company liquidity (12%)

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

What Startups Should Expect During The Covid-19 Crisis — Startup Genome

April 3, 2020

A new report looking at the impact of Covid-19 said a funding drought could wipe out many start-ups but ‘crisis begets opportunity’.

Research and policy advisory organisation Startup Genome has published a report detailing the impact that Covid-19 may have on start-up ecosystems around the world, suggesting that up to $28bn in start-up investment could be lost globally in 2020.

The report, which is the first in a series, looked at the potential ramifications for business in the US, the Americas, Europe, Africa, the Middle East, Asia and Oceania.

Although the economic fallout from the pandemic could be very significant, Startup Genome’s report said that “crisis begets opportunity” and highlighted lessons that could be learned from previous recessions.

Learning from China

The report examined the impact that Covid-19 has had on China’s start-up ecosystem, as this is where the effects of shut-downs and reduced spending were first felt. In January and February 2020, China’s industrial output dropped by 13.5pc while retail sales decreased by 20.5pc year on year.

“Chinese VC deals have contracted between 50 and 57 percentage points relative to the rest of the world since the onset of the crisis, as our analysis shows,” the report said.

“If a drop like that happens globally, even just for two months, approximately $28bn in start-up investment will go missing in 2020, with a dramatic impact on start-ups.”

‘A six-month drought in VC deals could wipe out a large portion of start-ups’
– STARTUP GENOME

The report suggested that many new start-ups will struggle to raise new rounds of funding and that the first to run out of cash “will be those who started to fundraise in the last few months, nearing the end of their runway before the crash”.

“With start-ups needing to raise money every 12 to 18 months, with three to six months’ worth of cash at closing, a six-month drought in VC deals could wipe out a large portion of start-ups,” the report stated.

The impact could potentially be worse due to the reduction in customer purchasing power and disappearing suppliers caused by ongoing containment measures around the world.

VC funding in previous recessions

The report said it’s worth examining what happened in previous recessions. Although fewer dollars were invested, more companies got funded.

“This suggests that businesses that are able to become cash efficient might become even more likely to raise money following a recession, albeit at lower valuations and lower total funds raised. Even more importantly, these estimates based on the Chinese and Asian experiences as well as past history are not destiny,” Startup Genome said.

The organisation added that start-up communities and VC funds have the opportunity to actively change the outcome by improving the situation for founders and for the economy. It also suggested that a recession could offer new opportunities to start-ups as it may be easier to acquire talent.

Startup Genome said that more than half of Fortune 500 companies started during a recession or bear market, and that more than 50 tech unicorns were founded during the last financial crisis between 2007 and 2009, including the likes of Asana, Quora and Airbnb.

Employment in start-ups

The report also examined the significant number of people in the US seeking unemployment insurance in March 2020. With more than 3.3m unemployed in the third week of March, the figure is five times higher than the previous record from October 1982.

“As Covid-19 continues to trigger more lockdowns and quarantines, the economic toll, on top of the more dire human life toll, will be tremendous,” the report added.

However, it said that start-ups are a major engine of job creation in modern economies, so governments and business leaders need to act together to help workforces.

The report suggested that during recessions, large corporations tend to focus on cutting down staff while the companies hiring tend to be young firms expanding their operations and growing through particular opportunities coming from the crisis.

“There is reason to be optimistic about economic restarts following the shutdowns,” the report said. “China, the first place to be hit by the virus, is slowly coming back to work: offices are being used again and manufacturers like Foxconn (the maker of most iPhones in China) announced they will be back to normal productions schedule around the end of March.”

The report also highlighted that LinkedIn data from China is suggesting that the number of companies hiring is slowly rebounding, but is yet to reach its previous levels.

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.
He could be contacted at udohrapulu@gmail.com