What are the leading trends in the world of startups?
The role of youth entrepreneurship in the global economy is significantly growing. Here is some indicative evidence: On a global scale, startups created an economic output of $2.8 trillion in the last two years ( figure includes valuations and exits). This is an output greater than the GDP of the United Kingdom! In fact, In fact, compared to five years ago, this figure has doubled. Also, startups and scale-ups are now creating the biggest amount of new jobs. As the world of startups becomes more important, what are the key trends shaping the ecosystem?
"DEEP TECHNOLOGY" DOMINATING STARTUP ACTIVITY- Almost half of the startups created worldwide (45%) are active in deep-tech industries that require patents and intellectual property. Specifically, the four sectors with the highest increase in investment funds (Seed + Series A) are Advanced production and robotics, blockchain, agro-technology and new food, artificial intelligence and Big Data Analytics.
The U.S.A. IS STILL THE “KING” BUT….- Silicon Valley and the USA at large, remain central focal points for startup founders. For example, out of the 100 best ranking AI startups, 80 are based in the USA and out of the 50 largest 'unicorns ' worldwide, 34 are American. However, in recent years, over 30 ecosystems were created in various geographical regions around the world; they may not have the size or shine of Silicon Valley, but they have grown into becoming important regional hubs of entrepreneurship. Most of them are located in major Southeast Asian and Western European cities such as London, Jiangsu, Shanghai, Tel-Aviv etc.
A BROADER INVESTMENT COMMUNITY- Private equity companies as well as angel investors, gradually increase their investment interest & participation in startups. Also, corporate giants like Samsung, Amazon etc. are increasingly turning their eyes on acquiring and integrating startups, so as to embed innovation in their organizations. VCs, of course, remain the leading investors in the field. In 2018 they invested $254 billion in about 18,000 startups, reflecting a 46% rise over 2017. Year 2019 has been marked by a reduction in deals, but also by gigantic investment rounds of $100million each.
MALE-DOMINATED FOUNDERS – WITH A SOCIAL VISION- We keep hearing of equal gender opportunities, but the truth is that the proportion of female startup founders remains consistently low (17% of total founders -an unchanged percentage for the last five years). Finally, another prevalent characteristic among young startup founders, is their active interest in resolving social and environmental challenges. As an example, one can refer to Y Combinator’s initiative to create a special accelerator programme for social impact startups involved in sectors such as: zero-carbon emission technologies, molecular agriculture, longevity, etc.
How will the startup ecosystem evolve in the coming years? Will startups become the innovation arm of large corporates or will they grow independently and become the Apple and Google companies of the next decade? There is no 'black or white ' answer. One thing is certain: youth entrepreneurship will keep having a significant impact in the global economy and will definitely shape how we do business in the future.
Written by Lyda Modiano. The article was originally published in the Greek “Startupper magazine” (October 2019 issue)