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Bengaluru startup ecosystem falls five spots to number 20 globally, pays its engineers the worst among top 20

Team YS
28th Mar 2017
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As it turns out, the candidate India has fielded to lock horns with Silicon Valley, Bengaluru, is lacking in various crucial aspects, as revealed by the Global Startup Ecosystem Report 2017 by Startup Genome.

The picture's suddenly not so rosy for Bangalore

The world's 20 best startup ecosystems, as ranked by the report, in that order, are Silicon Valley, New York City, London, Beijing, Boston, Tel Aviv, Berlin, Shanghai, Los Angeles, Seattle, Paris, Singapore, Austin, Stockholm, Vancouver, Toronto-Waterloo, Sydney, Chicago, Amsterdam-StartupDelta, and Bengaluru. These ecosystems were measured by their Performance, Funding, Market Reach, Talent, and Startup Experience.

This study, conducted in collaboration with organisations like Global Entrepreneurship Network (GEN), Crunchbase, and Orb Intelligence, surveyed a sample of 10,000 founders across over 100 cities from 50 countries. Moreover, 55 startup ecosystems were assessed in depth, from over 28 countries, to rank the top 20.

The report points out that India’s technology epicentre, Bengaluru, while once again holding its top position in India, dropped five spots, from rank 15 to rank 20, when pitted against the world's various startup ecosystems. With a population of 8.7 million, Bengaluru's GDP is approximately $45 billion, and its startup ecosystem is valued at $19 billion.

The study says that the statistics are still impressive for the most part with regards to the latest estimation of 1,800-2,300 active tech startups and the city's ability to attract millions of highly-skilled tech worker-migrants.

Beijing, Shanghai, and Stockholm are the newer entrants on the list, while Silicon Valley kept its spot at the top of the leader board. New York City, Paris, and Amsterdam also featured on the list again and held their old ranks. Other ecosystems that lost their positions and faltered are LA, Tel Aviv, Seattle, Chicago, Boston, Singapore, and Sydney. Chicago had an especially steep descent, and fell 11 spots.

Flipkart's latest $5.37 billion valuation, healthcare AI startup SigTuple's series A fund raising of $5.8 million, which is the largest in the sector in India, and Big Basket's $150 million fund raise all point to the Bengaluru ecosystem continuing to be lucrative. Besides, attracting global startups like Amazon and Uber to pitch their headquarters there, initiatives like Microsoft Accelerator, Qualcomm, and Cisco, and the partnerships struck with India's largest corporates like Yes Bank, Tata Group, and Mahindra have ensured that Bengaluru's ecosystem remains the country's most conducive.

Bengaluru came in at number 11 in Performance, and at number 7 overall based on valuations, but lost its leverage due to a very low Exit sub-factor, according to the study. “This indicates either that Bengaluru has a very bright future as these startups mature, or there is trouble at the top of the market with acquisitions,” reads an excerpt from the report.

Bengaluru's early-stage funding growth is at par with its current overall ranking. When it comes to the report's Market Reach index, Bengaluru has succeeded in collaborating with other startup ecosystems, but has struggled in garnering many foreign customers. And as far as its Talent index is concerned, Bengaluru reportedly has challenges with access and quality — as engineers haven’t been hired very quickly, experience is average and visa success is low, at 21 percent.

Bengaluru's engineers are the most cost-efficient – or another way to look at it is that they are the least paid amongst the global top 20. The study also points out that the city has the youngest tech workers among all startup ecosystems.

Bengaluru's annual salary for an engineer is about $8,600 a year, which is nearly 13 times lower than Silicon Valley's average, one-eighth of the global average, and a fourth of the average value for Asia-Pacific. The primary reason startups move to Bengaluru is because it is easier to find good technical employees; however, there are difficulties around access and quality.

“Though we’re a US-based startup, our development team sits in Bengaluru, as it’s relatively less expensive. It is definitely the capital of India in terms of concentration of tech talent and startups. However, this also means there’s a lot of churn among employees, who move around a lot to seek better opportunities. The quality and professionalism of resources is also questionable in many cases,” Abhimanyu Godara, Founder and CEO at Bottr.me, tells Startup Genome.

Almost 45 percent of Bengaluru's startup founders have at least two years of prior work experience in a startup, placing the ecosystem in the upper third globally, close to Silicon Valley at 49 percent and Tel Aviv at 55 percent. Ninety four percent of Bengaluru founders have a technical background, which is the highest rate in the world.

While Silicon Valley has 12,700-15,600 active startups, close to two million tech workers in the Bay Area, and nets 28 percent of the global funding pumped into early-stage startups, the second highest share in this regard is captured by NYC and Beijing, with 11 percent each.

One in three startups from outside the US has ties with Silicon Valley, and if you include US startups, that figure is 47 percent. Twenty five percent of the startups around the world have some connections with London, and 20 percent with NYC.

Delhi and Mumbai cracked the top ten runners-up list, and would have been 22nd and 28th in the world. The information and communications technology sector is roughly 4.5 percent of the current $100 trillion global gross domestic product (GDP), and will nearly double to claim 8 percent of the global GDP share in the next two decades.

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