Tel Aviv was ranked seventh in an annual survey of the world’s most attractive ecosystems for startups and innovation by US research firm Startup Genome.
Since the last report, Tel Aviv’s startup ecosystem has reached a valuation of $120 billion, landed three billion-dollar exits, and seen its startups raise a record $20 billion.
The city won 30 new unicorns, or companies valued at over $1 billion, and 20 companies went public, raising $4 billion. More than 130 multinational companies now have innovation centers in Tel Aviv, according to the report.
The study, released on Tuesday, mapped the global startup industry across 140 leading ecosystems around the world. According to the Startup Genome model, the higher the ecosystem ranking, the better a startup’s chance of succeeding globally.
Tel Aviv scored best in terms of performance, knowledge, connectivity and output, while its biggest weakness was local market reach. The number of new patents increased by 169% last year. Artificial intelligence, cybersecurity, big data and analytics were the strongest sectors.
The average time to exit a business in the city was seven years, faster than the global average of 9.4 years. Funding for seed rounds, Series A rounds and total venture capital was all well above the global average.
The report noted Israel’s tight-knit entrepreneurial community, strong research and development, educated population and government support, and the fact that it has the most startups per capita of any country, with nearly 3,000. in Tel Aviv only.
Tel Aviv’s ecosystem far surpasses anywhere else in the region, with no other city in the Middle East making the top 40 best cities. After Tel Aviv, the top ranked cities in the region were Dubai, Cairo, Riyadh and Abu Dhabi.
Tel Aviv accounted for 84% of the region’s share of venture capital funding in 2021, followed by the United Arab Emirates with 8%.
The Middle East has a young population, much of which is seeking entrepreneurial opportunities due to political instability and unemployment. Small businesses represent 94% of registered businesses in the region, but only 3% of them have access to global financing. However, major outflows and investment activity are growing rapidly, with investment increasing by 104% from 2020 to 2021, according to the report.
Also in the Middle East, the report states that 95% of all businesses in the UAE are startups or small and medium-sized enterprises, accounting for more than 40% of the country’s GDP. The Emirati city of Sharjah, home to the region’s fastest growing tech park, saw its startup ecosystem more than double in value to $208 million last year.
Cairo’s venture capital funding jumped 156% from 2020 to 2021.
The best global ecosystems were Silicon Valley, in first place, followed by London and New York, tied for second. Boston finished fourth, followed by Beijing in fifth, and Los Angeles in sixth.
Behind Tel-Aviv to complete the top 10, we find Shanghai, Seattle and Seoul.
Tel Aviv was also ranked 7th last year, having fallen one spot since 2019, when Tel Aviv and Jerusalem were ranked together in sixth place, tied with Los Angeles.
The top five cities remained at the top of the list, as they have for the past five years, but Beijing fell one spot, overtaken by Boston. Startup ecosystems in the top five cities were worth $3.8 trillion, compared to $2.3 trillion for the remaining top 30 cities. Overall, China’s growth slowed, while India saw a significant increase.
North America led the global rankings, accounting for 47% of the top 30 startup ecosystems, followed by Asia, with 30%. Seoul entered the top 10 for the first time and Berlin was the mainland European leader.
The report says startups added $6.4 trillion in value to global economies last year.
Tech companies have grown 2.3 times more than non-tech companies since the start of the pandemic, and last year a record 540 companies achieved unicorn status, up from 150 in 2020.
Startups have been raising funds much more successfully since the report began 10 years ago, with the global average Series A funding rounds tripling to $18 million.
The Global Startup Ecosystem report, published annually since 2012, is an in-depth study of the global startup scene. To compile the report, the group worked with 300 partners, gathered data and research on more than 280 innovation ecosystems, ranked the top 140 and analyzed 3 million startups.
Startup Genome is a leading San Francisco-based research company that has been ranking startup ecosystems worldwide in an annual report since 2012.
The company ranked Tel Aviv second in the world for cleantech and fourth for agricultural technology.