With the expansion of the private capital market, a global venture capital ecosystem is taking shape. In recent years, new VC centers have emerged, global investors have begun to focus more on emerging markets, startups have received far more financing than ever before, and valuations have soared.
Despite the strong growth of VC in the past 10 years, the industry outlook has changed dramatically in the past 18 months, and the financing environment has been tightening. Due to the impact of macro factors on investment, LPs, GPs and entrepreneurs have begun to evaluate the venture capital ecology in different regions in order to better explore long-term growth opportunities.
# “Degree of development ranking: San Francisco at the top, New York second, followed by Beijing and Shanghai”
Pitchbook released a ranking of the development of the global venture capital ecosystem, scoring major cities around the world based on scale and maturity. Specific reference is made to data on the number and value of Q2 venture deals, the number and value of exits, the number and value of funds, the number of unicorns, the participation of non-traditional investors, and the number of first-time financings in each city for Q3-2023 2017.
The results of the report show that San Francisco still has the most developed VC ecosystem in the world. There’s a sizable gap between San Francisco and other cities, with New York coming in second. Venture capital activity in the region, including deals, exits and financings, has been strong over the years. In the past six years (Q2 Q3-2023 2017), San Francisco-based startups have absorbed a total of $364.5 billion in venture capital, while New York’s figure is less than half that of San Francisco.
Top 20 VC Centers (2017 Q3-2023 Q2), Source: Pitchbook
In addition to San Francisco and New York, American cities such as Los Angeles and Boston rank high in terms of development scores. China’s Beijing and Shanghai also achieved higher rankings. Among the 20 most developed VC ecosystems, 85% are located in the United States and Asia, of which the United States occupies 9 seats; 8 cities are from Asia, including Shenzhen, Seoul, Hangzhou, Tokyo and Singapore.
European performance was relatively mediocre, with London and Berlin the only European cities in the top 20. Tel Aviv, Israel, ranked 20th as a rising upstart. In the past six years, Tel Aviv has invested $16.8 billion in venture capital and withdrawn $23.5 billion.
# “Growth rate ranking: Dubai has the fastest growth, with more than 20 from the US and Europe”
In addition to the level of development, the Pitchbook also evaluates the growth rate of the venture capital ecosystem in various regions of the world. The main evaluation criteria are the one-year, three-year and five-year growth rates of regional VC transaction, exit and financing activities. Although most of the top cities and regions are not prominent in terms of the scale of venture capital activity, they have a greater ability to attract capital and growth potential.
The results showed that Dubai beat Detroit to grow the fastest growing region in the venture ecosystem. In order to get rid of the dependence on the oil economy, Middle Eastern countries have sought to transform, and venture capital is one of the fastest ways to enter emerging industries. As a commercial, tourism and financial center in the Middle East, Dubai is vigorously developing its investment business, while also investing in new energy, artificial intelligence, finance and other fields around the world.
Top 20 VC Centers with Growth Rate (2017 Q3-2023 Q2), Source: Pitchbook
No. 2-ranked Detroit is transitioning from auto manufacturing to a tech hub. Berlin ranked third and was the fastest growing city for venture capital business in Europe, with Raleigh and Houston in the United States occupying four or five places. With fierce competition and rising costs for venture capital groups, startups and investors will further target these fast-growing emerging regions. Among the top 20 regions for VC ecological growth, 65% are located in Europe or the United States, including Madrid, Milan, Tallinn, Vienna and Philadelphia, while Asia accounts for only 15%.
The findings also show that the degree of development of the VC ecology in each region is generally negatively correlated with the growth rate. More obvious are San Francisco, Beijing and Boston, which are highly developed but lag behind in growth scores, while New York, Shanghai, London and Berlin strike a balance between development and growth.
References
1.Pitchbook,Global VC Ecosystem Rankings.
2.KPMG Global,Global VC investment continues to fall to $77.05 bn.
3.Bain,Global Venture Capital Outlook: The Latest Trends.
(Source: Haitou Global)
