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Startup Ecosystem Ranking Clarification

April 20, 2012 by Compass

Last week we put out a mini report on Startup Ecosystems, where our main focus was on the comparison of Silicon Valley, New York City and London. Along with this mini report we also put out a ranked list of startup ecosystems, but we noticed that many people interpreted this ranking to be based on much more than it was, so we want to clarify what it was based on.

The list we put on the top 25 startup ecosystems was simply ranked based on the “average throughput” or the total activity in the Startup Genome dataset. Given the Startup Genome has one of the largest datasets on entrepreneurial activity worldwide, with over 16,500 startups in total, we thought analyzing the data by location could create more transparency for the many entrepreneurial ecosystems emerging worldwide.

However to be clear, this list should not, and wasn’t intended to be used to determine which ecosystem is best. Activity is simply one factor to determine the quality of an ecosystem. Additionally, although our dataset is large, it is not completely random, as there is some selection bias based on language, where we received the most press, and our focus on Internet startups.
Some have also noted, the places where our dataset doesn’t correlate with datasets that measure the size and quantity of VC deals in various geographic regions. It seems a large part of this discrepancy comes from the fact that although we have thousands of companies that have raised funding, many startups don’t. This early stage focus slants our perspective in a direction there’s been little insight into, as there is little public data about this cohort of pre-VC companies.

But what we can see is that there is a clear demand for a more detailed ecosystem ranking.
In the coming months we plan on creating a robust ranking system based on a diversity of performance indices, supplemented with additional data sets, to better capture the strengths and weaknesses of different startup ecosystems. Currently, we only have a large enough sample to do a detailed performance analysis on a small set of the top 25 ecosystems. This is why we haven’t put out this kind of ranking system yet. But since the release of the report last week we’ve had dozens of people and organizations from ecosystems around the world offering their help and support to help us cross that threshold.

For the last 50 years the technology startup scene was dominated by Silicon Valley and a handful of smaller ecosystems. Only in the past few years have new startup ecosystems started to spring up all over the world. We’re excited to be a part of helping these startup ecosystems figure out what they need to do to flourish.

Let us know in the comments or over email at feedback@compass.co what factors you think are an important measure of ecosystem health.

And here’s an interview Bjoern did with Silicon Allee on a similar topic.

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