Los Angeles is a great place to launch a start-up business, according to a new report. The Startup Genome, a research project examining what makes startups succeed or fail, recently released its Startup Ecosystem Index, which ranks the world’s top 20 startup ecosystems.
Although Silicon Valley topped the list, Los Angeles was not far behind. The city came in third, behind Tel Aviv. Seattle and New York City rounded out the top five.
The report notes that although Silicon Valley is by far the most powerful ecosystem, innovation is quickly spreading around the globe. “Just 5 or 10 years ago most of the other ecosystems on this list either barely existed or didn’t exist at all. The global startup revolution is going strong, indeed,” the report states.
The rankings were based on a 50-variable, 8-component index. They included Startup Output, Funding, Company Performance, Talent, Support Infrastructure, Entrepreneurial Mindset, Trendsetting Tendencies and Ecosystem Differentiation.
The report specifically notes that the startup ecosystem in Los Angeles is gaining momentum. “Although the ecosystem has 70% less startups than Silicon Valley, it has a healthy funnel of startups moving through the startup lifecycle. There is a healthy opportunity for LA to establish itself as an alternative to Silicon Valley,” the report states.
Below are a few specific findings regarding Los Angeles:
- Startups are 12% less likely to monetize directly than Silicon Valley (SV) startups
- Compared to Silicon Valley, LA startups are 58% more likely to have consumers as their primary payer and 43% less likely to have SMEs as their primary payer
- Startups in LA employ as many people per stage as startups in Silicon Valley. LA has no funding gaps. It has a healthy mix of capital sources.
- LA entrepreneurs are as ambitious as SV entrepreneurs. Both tackle similarly large total addressable markets, and concentrate less on ‘new’ markets and ‘niche’ markets.
- The key challenges of LA startups are similar to SV startups: customer acquisition, building the product, funding, and building the team.
- The average age of entrepreneurs in LA (38.22) is 4.1 years older than in SV.
The full report is available for download on the Startup Genome blog.
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