Sydney has fallen back one spot to 17th in an authoritative ranking of the world’s best cities for startups, despite a year that saw record levels of venture funding raised and innovation moving to the centre of the political agenda.
London, meanwhile, has surged three spots in the rankings to No.3 on the annual Startup Genome report. It displaced Boston and Tel Aviv from the top five and, in a sign of the rapidly evolving global landscape for startups, Beijing and Shanghai are new additions to the list, at No.4 and No.8 respectively.
Silicon Valley and New York City remain the world’s top two cities for startups.
The Startup Genome report for 2017 was based on a survey of 10,000 founders in over 100 cities and across 50 countries. It ranks cities based on a range of criteria including levels of available funding, its ability to attract talent and other resources, the ability of startups to go global, and the values of companies.
It’s a sign of the intense competition between major cities that Sydney managed to go backwards after a year in which AirTree Ventures raised $250 million in Australia’s largest ever venture funding round, and there were significant policy advances for the sector including better incentives for investors and greatly improved communication between the startup sector and state and federal governments.
The Startup Genome report says the ranking “is primarily driven by one question: in which ecosystems does an early-stage startup have the best chance of building a global success?”
Here’s the top 20, with a breakdown of their relative performance on the key measures:
After all the money that has been raised over recent years, Sydney ranks highly on available capital and on the growth rate of exits, or how well founders do when they sell their business on either through a private deal or a public listing.
But it ranks in last place of all of the cities on the list for “performance”, which looks at output, exits, valuations, and the success of startups companies at different stages of their life cycle.
“Sydney boasts an estimated 1,300-2,100 active tech startups, which recently beneﬁted from determined government incentives, gangbuster exits, and as a consequence, a new wave of growth,” the report says. It also notes the establishment of TechSydney to act as an advocate for the city’s status as a global startup hub, federal tax incentives for investors, and the now large levels of funding available.
The city, however, “performs below its overall ranking in Startup Output and valuation,” the report says, and adding that its market reach “is held down by its relative lack of foreign customers”.