Nairobi, Lagos and Cape Town lead startup ecosystem in Africa
By Boitshoko Shoke
The Global Startup Ecosystem Report 2024 (GSER 2024) powered by Startup Genome and Global Entrepreneurship Network (GEN) was released on the 10th of June 2024, now in its twelfth year the report offers a detailed analysis of startup ecosystems around the world, providing insights into the challenges, opportunities and shifts swaying the entrepreneurial landscape.
Data from 4.5 million startups across 300 global ecosystems inform the findings, making the report a key tool for policymakers and entrepreneurs.
In 2023, the global start-up economy faced mixed outcomes despite easing inflation and unexpected global GDP growth, with the tech sector experiencing prolonged stagnation in exits and funding, far from the pre-covid levels.
GSER 2024 reveals that the top three startup ecosystems have remained the same for the last 4 years, with Silicon Valley in the top spot which accounts for 59% of the total Ecosystem Value within the Top 5 global ecosystems followed by London and New York City, which share the second spot.
The ranking is a weighted average of factor scores: Performance (30%), Funding (25%), Market Reach (20%), Talent and Experience (20%) and Knowledge (5%), forming the ecosystem index.
Silicon Valley’s sustained dominance is a testament to its unparalleled access to venture capital, a robust talent pool, and a culture that fosters innovation.
For instance, global leaders like Tesla and Google, both birthed in Silicon Valley, demonstrate the ecosystem's capacity to nurture groundbreaking enterprises.
London and New York City have maintained their positions primarily due to their vast financial markets and similar to Silicon Valley, their diverse talent pools.
While London’s fintech boom, illustrated by organisations such as Revolut and TransferWise, highlights the city’s innovative edge.
Notable changes include the rise of Tel Aviv to joint fourth position with Los Angeles. Tel Aviv’s rise is attributed to its strides in tech, particularly Cyber Security and Artificial Intelligence. Tokyo debuted in the top 10, reflecting Japan’s investment in startup support infrastructure.
The Chinese ecosystem did not fare well with Beijing and Shanghai slipping in the rankings. While in Europe Paris leaped to 14th place, indicative of their supportive policy environment.
The report further reveals that in 2023, the number of new unicorns which are startups that reached a $1billion valuation before exiting- dropped significantly, with 57% fewer than in 2022 and 87% fewer than in 2021.
However, in the first quarter of 2024, there was the emergence of 25 new unicorns – showing promising signs of recovery, the most since the last quarter of 2022.
More than half of the new unicorns in 2023 were in the Gen AI and Deep Tech Sectors, driven by substantial early-stage investments, particularly from corporate venture capital. The US led with 57% of the global share of new unicorns, while China’s share almost doubled to 11%.
The top 100 Emerging Ecosystems now boast an Ecosystem Value exceeding $1.6trillion, marking a slight increase from 2022.
Europe leads the ranking with 42% representation, followed by North America at 27%.
In Sub-Saharan Africa Nairobi ranked first, while Lagos ranked second and Cape Town and Johannesburg occupying the third and fourth position respectively.
Cape Town was listed in the top 100 Emerging Ecosystems. While Johannesburg did not make the top 100, the city is home to many of Africa’s leading banks and financial institutions, as well as Africa’s largest stock exchange, providing a fertile environment for its fintech ecosystem.
As the commercial hub of sub-Saharan Africa and ranking first in knowledge and third in talent and experience within the region, the city of Johannesburg offers access to key markets.
As policymakers and entrepreneurs digest these insights, the focus will likely remain on fostering environments that support high-growth startups and unlocking the potential for entrepreneurial talent worldwide.
To download the Global Startup Ecosystem Report (GSER), visit: www.22onsloane.co.za
Boitshoko Shoke is the Research and Impact Manager of 22 On Sloane, Africa’s largest entrepreneurship campus.
BUSINESS REPORT