Startup Genome Report 2018

August 19, 2018

 

I recently read the Global Start Up Ecosystem Report 2018 published by Startup Genome, a prominent Silicon Valley Think Tank (https://startupgenome.com)

 

The report identifies 2 major trends for future successful start-ups:

1  Tackle specific Third Wave verticals—think Uber for mobility or Airbnb for hospitality.

2  Rely on Deep Tech—build businesses through technological breakthroughs, e.g. distributed ledgers, AI, or Life Sciences.

 

The report shows how the 3 declining sectors in terms of 5 years decline in early stage funding are primarily associated with the first and second wave of the internet

#1 Adtech (-35% 5-year decline in early stage funding deals)

#2 Gaming (-27% 5-year decline in early stage funding deals)

#3DigitalMedia(-27% 5-yeardeclineinearlystagefundingdeals)

 

Differently the top 4 growing sub-sectors are the ones building technologies breakthroughs:

#1Adv.Manufacturing&Robotics (189% 5-year increase in early stage funding deals)

#2 Agtech & New Food (171% 5-year increase)

#3 Blockchain (163% 5-year increase)

#4 Artificial Intelligence, Big Data & Analytics (77.5% 5-year in-crease)

 

We see a similar story in the performance of tech companies that went public from 2015 to 2017. Measured by revenue growth following their IPO, new era sub-sectors outperform more mature sub-sectors like Adtech.  

 

Top accelerators like Y Combinator also show this shift on some level: 18% of YC’s most recent batch of companies are in Biotech and Health.

 

The foundation for startups in this new era of tech comes in no small part due to global growth in research and development (R&D). Patent applications have grown by an astounding 174% in the past 20 years, with R&D spending as a share of the GDP growing by 13% in the same time period.

 

The report is full of interesting data and stats. Please find below some of the most interesting data about the features of successful founders:

 

Breadth is better than Depth:

       - Breadth—a preference for abstraction, general overviews, and “big picture” thinking. Research shows that a high score on Breadth to be positively correlated with startup success.

      - Depth—indicates a preference for details, specification, and concrete thinking. A high score on Depth is found to be positively correlated with startup venture failure.

 

Unstructured founders are more prone to success than organized founders.

Structure—preference for planning and organizing before starting on a task. Research finds a high score here to be correlated with start-ups venture failure

 

Reflective and patience founders (someone who pause and waits before taking actions) are more probable to be successful.  

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