The 20 hottest startup hubs in the world

While Silicon Valley may stand undefeated as the most prominent name for tech entrepreneurs and startup visionaries, other regions all over the world are worthy competitors.

Compass, a San Francisco-based benchmarking software company, has published a 2015 Startup Ecosystem Ranking Report that identifies the top 20 startup “ecosystems” in the world. The report — which last came out in 2012 — ranked cities in five categories: performance, funding, talent, market reach, and startup experience.

To compile the list, Compass consulted with entrepreneurs from 25 countries to conduct more than 200 interviews and 11,000 startup surveys. Startup ecosystems excluded from this report were China, Taiwan, Japan, and South Korea, which Compass said it plans to include in its index later this year.

20. Montreal, Canada

Montreal makes its debut on the rankings this year. Its cultural diversity, top engineering schools, and angel investor groups make it ripe for novel ideas and successful startups.

Montreal also has four reputable engineering schools that teach 5,000 computer science graduates every year, according to Compass.

Performance: 19

Funding: 17

Market Reach: 16

Talent: 13

Startup Experience: 17

18. Vancouver, Canada

Vancouver today is powered by software development, biotechnology, and entertainment. By contract, its local economy used to be sustained by mining, forestry, and shipping industries.

The up-and-coming startup Slack opened an office there because of Canada's immigration policies and a time zone in Canada that matched up to San Francsico, according to the report.

Performance: 18

Funding: 19

Market Reach: 15

Talent: 14

Startup Experience: 11

17. Toronto, Canada

Toronto is down nine spots since the 2012 rankings due to its slower growth. According to Compass, the most economically dominant city in Canada could be more competitive with better access to venture capital in the area.

Performance: 14

Funding: 18

Market Reach: 14

Talent: 15

Startup Experience: 18

15. Bangalore, India

The third most populated city in India, once known as 'the world's back office,' is the startup leader in the country.

'The Indian hub of Bangalore has had explosive growth in the last few years,' the report notes.

More from the report:

Recent success stories such as Flipkart and InMobi are part of the unicorn club with valuations beyond $US1 billion. Their success helps recirculate wealth and expertise back into the ecosystem. This in turn increases the attention of the international investor community who are eager to find high potential, under-valued new startup.

Performance: 10

Funding: 6

Market Reach: 20

Talent: 17

Startup Experience: 12

14. Austin, Texas

Austin was first recognised as a tech hub thanks to industry titans like IBM and Dell. Here, talent in the area is not only proficient but also less expensive than the North American average.

'Austin's consistent performance in the tech sector has led to a tech-savvy workforce, counting over 100,000 people, a high number considering its 1.8M population,' the report noted.

Performance: 16

Funding: 14

Market Reach: 18

Talent: 5

Startup Experience: 2

12. São Paulo, Brazil

A vibrant city called home by more than 20 million people, São Paulo boasts the best quality talent in South America.

'The city has around 20 million people and is a vibrant cultural and financial hub with more than $US2 billion in daily trade on its local stock exchange,' the report noted.

While the city has improved its rank since 2012, it faces several challenges to entrepreneurship, including economic downturn, investor confidence, and high costs.

Performance: 9

Funding: 13

Market Reach: 11

Talent: 19

Startup Experience: 19

11. Paris, France

With the help of public grants, subsidies, and loans, Paris has maintained its #12 rank for its startup ecosystem. Entrepreneurs in the French capital are largely interested in the sharing economy, collaborative consumption, and artificial intelligence.

'Two of the ecosystem's recent success stories are Criteon (worth more than $US2B) and BlaBlaCar (undisclosed valuation, but expected to be the next French billion dollar company),' the report stated.

'It is because of these and many other great startups that Paris-based entrepreneurs are beginning to attract attention from U.S.-based venture capitalists.'

Performance: 13

Funding: 13

Market Reach: 6

Talent: 16

Startup Experience: 15

9. Berlin, Germany

Berlin's tech environment ramped up after 2010 and has moved in the rankings since 2012 when it was #15. Here, startups could create as many as 40,000 new jobs by 2020.

'Startups in the Berlin ecosystem have historically been successful in markets like e-Commerce, gaming, and marketplaces, with new startups showing potential in other verticals such as SaaS and adtech,' the report noted. 'A strong creative scene and low living costs have resulted in a soaring inflow of national and international tech talent.'

Performance: 7

Funding: 8

Market Reach: 19

Talent: 8

Startup Experience: 8

7. Chicago, US

Up from its #10 rank in 2012, Chicago is picking up steam and has between 1,800 to 3,000 active startups.

'A key reason for Chicago's growth is, without a doubt, the exceptional success of a few local startups,' the report stated. 'Chicago is the birthplace of Groupon and GrubHub, and is currently home to over ten unicorns -- startups with a valuation over $US1 Billion.'

Performance: 8

Funding: 12

Market Reach: 5

Talent: 11

Startup Experience: 14

6. London, United Kingdom

London has risen in the ranking since the last report when it was #7. Tech City UK, a government-funded startup initiative, suggests London-based startups alone could make 10,000 jobs in the latter half of 2015.

'The London startup ecosystem stands out for its exceptional access to affluent consumers and powerful corporations, solid funding landscape, and ambitious government initiatives,' the report stated.

Performance: 5

Funding: 12

Market Reach: 3

Talent: 7

Startup Experience: 13

5. Tel Aviv

Compass attributes Tel Aviv's focus on tech to its proximity to Tel Aviv University and the Israeli Defence Forces. But it also notes that Israel's performance could benefit from more international talent, which is 40% lower than in Silicon Valley.

Performance: 6

Funding: 5

Market Reach: 13

Talent: 3

Startup Experience: 6

3. Los Angeles Orange County, US

Snapchat and Tinder are among Los Angeles-Orange County's success stories.

'The city is estimated to have 200,000 engineers hailing from a variety of talent pools such as the California Institute of Technology,' the report noted.

Performance: 5

Funding: 4

Market Reach: 2

Talent: 10

Startup Experience: 5

1. Silicon Valley and Bay Area, U.S.

Silicon Valley continues to serve as an icon of startup culture for aspiring entrepreneurs from all backgrounds. Here, more than 50% of startups are founded by immigrants and and more than 70% of engineers are also immigrants.

From the report:

Silicon Valley has earned its reputation as the global tech mecca with 14,000 to 19,000 startups and 1.7 to 2.2 million high-tech workers.

It is the home to success stories such as Apple, Google, Facebook, and countless others. Just these three companies combined have a market cap of $US1.5 trillion and employ more than 165,000 people worldwide. Silicon Valley's local and global impact is undeniable.

Performance: 1

Funding: 1

Market Reach: 4

Talent: 1

Startup Experience: 1

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