Aug 30, 2023

Startup ecosystems: exploring hotspots for innovation

Every day, thousands of people all over the world are starting new businesses, whether they’re developing new technology ideas or simply want to branch out on their own. 

Naturally, some are more successful than others, and there are many factors involved. But analysing the key trends and characteristics of the best-performing startups can help you understand how best to evolve your own business, and how to attract funding and investment.

We’ve analysed figures from Startup Genome’s 2023 Global Startup Ecosystem Report, based on data from 3.5 million startups and more than 290 ecosystems worldwide. Those insights have been combined with our own experience and expertise, meaning this blog gives you practical advice on the best steps to take on your startup adventure.

Global funding

The report found that the number of startups that were funded globally dropped by 18% in 2022 alone. However, the average amount of funding in each deal actually rose slightly, from $4400 to $4500.

While this might sound like alarming news for startups if taken at face value, things aren’t as bad as they seem. The growth in investment capital means that there is still plenty of interest from investors if they come across the right business opportunity. The key here will be to further refine and focus your approach to attracting funding:

Suggested actions:

  • Strengthen your proposition and business plan, and demonstrate to prospective investors why your startup stands out
  • Optimise your pitch with the information that investors will be most interested in
  • Time your investor approach to perfection, by making sure you have the right people and USPs in place before you start

Emerging ecosystems

While there has been so much change in the business world over the past few years, some things have remained consistent. And the centres of the startup ecosystem universe remain the same ones that dominated prior to the onset of the pandemic. The report has found that Silicon Valley remains the biggest startup ecosystem in the world, with New York City and London tied for second place.

To a certain extent, this is a case of “if you can’t beat them, join them”: a globalised world means you can take advantage of these established ecosystems even if you aren’t physically located in them. There is plenty you can do to leverage vibrant startup scenes, wider access to capital, deeper pools of talent and more supportive infrastructure:

Suggested actions:

  • Undertake detailed research on different ecosystems and the opportunities they can give you
  • Network with wider communities in your chosen locations, and get involved with industry events, conferences and workshops
  • Collaborate closely with established players and seek partnerships with them

Current trends

If you’re looking for an area where investment interest is perhaps at its highest, then Deep Tech is an excellent place to start. These are technologies based on scientific advancements that can make a real difference across many different industries, so it’s no surprise that capital investors are so enthusiastic. It makes business sense for them, too: Deep Tech startup exit amounts have risen by 326% from 2017 to 2022, compared with an average of 225% for other startups.

Therefore, this is the perfect opportunity to explore whether or not you can leverage Deep Tech in the months and years ahead and make a real impact in your industry. Doing this may require substantial effort and investment, especially in R&D, but could pay off big in the long run.

Suggested actions:

  • Research thoroughly to find opportunities to innovate and differentiate
  • Build internal expertise, whether hiring or training experts, collaborating with research centres and universities, or investing in the right tools
  • Educate stakeholders with resources, workshops and training sessions to develop clear goals, and make changes based on stakeholder feedback if required

In summary

While this isn’t the easiest time to attract investment, it’s by no means impossible. Where the difference can be made is in focus and clarity of vision, as prospective investors are less willing to commit to anything with uncertainties. If you can be absolutely clear in what you’re doing, why it will be a success and what an investor will get out of it, then you can give them the confidence to partner with you and support your future success.

At InfinityVC, we’re always on the lookout for exciting startups who can gain from our tech experience, sales and leadership expertise, and support across brand, marketing, design and product. If you think you might fit the bill, find out more here.