Lagos leads as Africa performs poorly on 2021 global startup ecosystem rankings

Lagos leads as Africa performs poorly on 2021 global startup ecosystem rankings
Lagos leads as Africa performs poorly on 2021 global startup ecosystem rankings

Nigerian commercial city, Lagos has been ranked as the leading startup ecosystem on the African continent. According to the 2021 Global Startup Ecosystem Report (GSER), Lagos ranked 52nd of the top 100 emerging startup ecosystems across the globe; just a bit ahead of Cairo (55), Nairobi (77) and Cape Town (81).

Interesting, these (4) were the only African ecosystems listed among the top 100 emerging across the globe. No African startup ecosystem was among the global 100.

The 2019 Global Startup Ecosystem Report was created by the Global Entrepreneurship Network (GEN). It is released annually in partnership with TWC, Crunchbase, Dealroom, Bella Markets and Tech Nation. The report is based on interviews, surveys, and research from hundreds of startup support organizations, thousands of founders, and millions of companies.

For the report, 275 ecosystems across over 100 countries were assessed to rank the top global 30, runners-ups of up to the global 100. The top Emerging Ecosystems segment was introduced in 2020 to place a special focus on ecosystems with significant promise.

Lagos’ placement on the emerging ecosystem list isn’t surprising. The city was listed as one of the 30 Challenger startup ecosystems in 2019. The challenger list consists of ecosystems outside the global top 30 ranked ecosystems that have a real shot of making the list in the future.

Lagos leads as Africa performs poorly on 2021 global startup ecosystem rankings

Although the city’s administrators have introduced a number of regulations that many have considered stifling, Lagos has consistently featured on the list. Recall that it recently became Africa’s top startup ecosystem on the StartupBlink Ecosystem Index Report 2021,  switching places with Nairobi, Kenya.

How the emerging ecosystems fared…

Emerging startup ecosystems are so-called as they listed for their potentials to become leading global ecosystems of the future. They were measured by the same metrics used in judging the global 100: Performance, funding, market reach, talent & experience, connectedness and knowledge.

Just that in this category, the factors are designed to rank the ecosystems based on where early-stage startups will most likely build globally successful companies.

According to the report, Mumbai outperformed all ranked ecosystems to become number 1.

Lagos leads as Africa performs poorly on 2021 global startup ecosystem rankings
Mumbai and other Indian ecosystems produced about 3 billion-dollar startups per month in 2021 (Venture Intelligence). Image credit: Unsplash

The Top 100 Emerging Ecosystems are collectively worth over $540 billion in Ecosystem Value, which is a 55% increase from last year. The Top 100 Emerging Ecosystems created 124 billion-dollar startups in the period between 2011 and 2020, with 53 ecosystems contributing the majority.

Asia is currently in the lead. It accounts for 36% of the billion-dollar club, followed by North America with 30% and Europe with 27%.

Europe and North America still boast the majority on the list. Latin America increased its tally by 3: Buenos Aires, Santiago-Valparaiso, and Rio de Janeiro joining Mexico City and Bogotá. The MENA region has four in total.

Lagos leads as Africa performs poorly on 2021 global startup ecosystem rankings
Share of emerging ecosystems by region…

The report indicated that the top 100 Emerging Ecosystems are collectively worth over $540 billion in Ecosystem Value, a significant 55% increase from worth last year. This signifies an accelerated rebound from the impact of the pandemic.

Also, they have created 124 unicorns (billion-dollar startups) in the period between 2011 and 2020, with 53 ecosystems contributing the majority.

African startups are projected to have raised as much as $2.8 billion this year, with Nigeria and Kenya the epicentres, according to tech ecosystem accelerator AfricArena.

Projections put African investment at more than $10 billion by 2025.

A view of the global ranking

Despite a turbulent year, the same five global startup ecosystems from 2020 remain at the top of our rankings. The top seven global ecosystems have remained the same for three consecutive years. This indicates that the COVID-19 pandemic did not significantly alter the global order.

The report indicates that each leader is worth at least $110 billion in Ecosystem Value, with a median of $157 billion. In aggregate, the seven leaders account for an Ecosystem Value of over $2.2 trillion, up half a trillion dollars from last year.

Lagos leads as Africa performs poorly on 2021 global startup ecosystem rankings
Global top 10 by ecosystem value…

Just as seen in 2020, 6 countries have two-third or more top startup ecosystems. For instance, the United States has 15 of the top startup ecosystems: one more than last year. China, India, Canada, Germany, and Australia all maintained their top ecosystems on the ranking.

As expected, Silicon Valley is the global number 1 ecosystem. It is followed by New York City and London, which for two consecutive years have tied for number 2. Beijing is number 4 while Boston is number 5.

Categorizing by continent indicates that North America continues to dominate the Global Rankings, with 50% of the Top 30 ecosystems in this region. Asia is next with 27% and has the potential to catch up with North America as evidenced by the steady growth in exit value.

Exits in the first half of 2021 total over $423.5 billion.

Lagos leads as Africa performs poorly on 2021 global startup ecosystem rankings

This year’s top performers excel in the talent and experience Success Factors. The report also indicates that ecosystems such as New York City, London, and Boston are able to attract high-quality tech talent to their ecosystems. in 2021

Tokyo is the sole new entrant to the Top 10, moving up six places to become global number 9. The primary driver: an increase in successful exits contributing to a growth in Ecosystem Value.

Great policies are the way forward…

Bad policies, skewed legal systems and an uncertain political environment has been the bane of African ecosystems. Previous reports have placed huge promise on ecosystems like Lagos, Kigali, Cairo and Cape Town. But these had either fallen off in subsequent years or remained in emerging categories without serious rises.

The African Heads of States and Governments pose during African Union (AU) Summit for the agreement to establish the African Continental Free Trade Area in Kigali, Rwanda, on March 21, 2018. / AFP PHOTO / STR (Photo credit should read STR/AFP/Getty Images)
The African Heads of States and Governments pose during African Union (AU) Summit for the agreement to establish the African Continental Free Trade Area in Kigali, Rwanda, on March 21, 2018. / AFP PHOTO / STR (Photo credit should read STR/AFP/Getty Images)

Truly, African countries have been rolling out seemingly positive versions of Startup Acts for several years, with tax breaks, grants, and policies that provide founders with financial and legal support during their startups’ infancies.

For example, in December, Kenya introduced a bill that, among other things, establishes a National Innovation Agency to foster partnerships among startups, incubators, and investors.

Ethiopia’s proposed version covers everything from streamlining processes to increasing foreign investment to covering fees for registering intellectual property. The Nigeria government was muting a similar bill with participation from private players.

In almost all instances, implementation has been a notable downside. You can read the report here.


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