CAE Releases New Report: “The Rise of the Global Startup City: The New Map of Entrepreneurship and Venture Capital”

October 5, 2018

For Immediate Release
4 minutes

Washington D.C. – The Center for American Entrepreneurship (CAE), a nonpartisan research, policy, and advocacy organization, and the NYUSPS Schack Institute of Real Estate, today released a ground-breaking analysis of the global distribution of venture capital investment and startup activity.

For decades, venture capital was an almost exclusively American phenomenon.  As late as the mid-1990s, nearly all global venture capital investments went to U.S. companies.  During the second half of the 1990s and throughout the 2000s, however, venture capital slowly began to flow into locations outside the United States.  The last five years in particular have seen a dramatic rise in startup and venture capital activity in locations in Europe, Asia, and elsewhere.

To assess the changing global map of startups and venture capital investment, Ian Hathaway, Research Director at the Center for American Entrepreneurship, and Richard Florida, University Professor at University of Toronto’s School of Cities and Rotman School of Management, and Distinguished Fellow at NYU’s Schack Institute of Real Estate, analyzed more than 100,000 venture capital deals across more than 300 global metropolitan areas between the years 2005 and 2017.

Their analysis reveals several key findings:

First, while the United States continues to generate the largest amount of startup and venture capital activity, its share of the global total has fallen significantly, from more than 95 percent in the mid-1990s to about two-thirds in 2012, to a little more than half today.  Among other nations, China has gained the most ground, attracting nearly a quarter of global venture capital investment in recent years.  India and the United Kingdom together account for another 9 percent of global venture capital investment, while Germany, France, Israel, Singapore, Sweden, and Japan collectively contribute another 9 percent to the global total.

Second, the recent expansion of global venture capital investments has been driven by cities – many of them outside the United States.  The San Francisco Bay area, which spans the San Francisco and San Jose metropolitan areas, remains the world’s dominant location for startup activity, with roughly a fifth of global venture capital investment.  But a growing list of global cities are rapidly gaining ground, including London, Berlin, Paris, and Stockholm in Europe; Beijing, Shanghai, Bangalore, Delhi, Mumbai, and Singapore in Asia; and Tel Aviv in the Middle East.

Third, the globalization of startup cities and venture capital is highly concentrated geographically.  Just 24 cities account for three-quarters of global venture capital investment, despite accounting for just 4 percent of the world’s population.  The top six cities alone attract more than half of all global venture capital investment, despite accounting for just 1 percent of global population.  This geographic concentration is even more striking when looking at these cities’ contribution to global growth in activity – just four cities accounted for half of the global increase in venture capital investment in the last half-decade, and the top thirteen were responsible for three-quarters.

“While the United States remains the world’s venture capital and entrepreneurship leader for now, the extent and accelerating pace of the erosion in America’s leadership position should be a wake-up call to the U.S. innovation community and policymakers,” said Hathaway.  “Our findings make clear that the world’s most innovative and entrepreneurial talent no longer has to come to America to launch, fund, and scale their companies – they can build great companies in many other places.  To retain its leadership position, the United States must ensure a policy environment that cultivates and supports innovation, and that starts with our immigration policies.  The reason is simple – capital follows talent, and capital-backed talent produces the innovation that will define the future.”

“The growing importance of large cities to global entrepreneurship and innovation cannot be overstated,” said Florida.  “Thirty years ago, there were no tech startups in large cities.  Suburban areas outside cities were the incubators of innovation.  Today, entrepreneurship and innovation are urban phenomena – San Francisco, New York City, London, Berlin, Beijing, Los Angeles, and Boston.  The migration of the venture capital and entrepreneurship ecosystem into major urban areas in recent decades is striking and creates both opportunities and major challenges for urban policymakers.”

Full Report

The full report can be found at or downloaded here.  CAE welcomes press, bloggers, policymakers, scholars, think tanks, and other interested parties to use and reference our report with attribution as: “Source: The Rise of the Global Startup City: The New Map of Entrepreneurship and Venture Capital,” Center for American Entrepreneurship and the NYUSPS Schack Institute of Real Estate, October 2018.”

About the Center for American Entrepreneurship (CAE)

The Center for American Entrepreneurship (CAE) is a nonpartisan, Washington, DC area-based 501(c)(3) research, policy, and advocacy organization.  CAE’s mission is to engage policymakers in Washington, and at state and local levels across the nation, regarding the critical importance of entrepreneurs and startups to innovation, economic growth, and job creation – and to pursue a comprehensive policy agenda intended to significantly enhance the circumstances for new business formation, survival, and growth.

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Follow CAE on Twitter: @startupsUSAorg

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