Beijing Drops in Global Startup Ecosystem Ranking Amid US-China Tech Tensions
In the latest development highlighting the dynamic nature of the global start-up landscape, Beijing has experienced a notable decline in its position within the world’s top 40 start-up ecosystems. Amidst a backdrop of a struggling domestic economy and escalating tech tensions between the US and China, the Chinese capital now ranks at No. 8, slipping three places from its standing in 2022.
This year, the pinnacle of startup ecosystem success was once again claimed by Silicon Valley. Following closely, New York and London are jointly holding the second position, showcasing the diverse geographic distribution of leading start-up hubs. Notably, Singapore has ascended to become the top-ranking Asian city this year, securing the seventh spot and surpassing Beijing. Other Asian powerhouses, Seoul and Tokyo, round out the top 10.
The Global Start-up Ecosystem Ranking (GSER) by Startup Genome serves as a critical analysis, providing insights based on five key measures: funding, performance, market reach, talent and experience, and knowledge. Beijing, while nearly maxing out scores in the latter four categories, found its Achilles’ heel in the funding sector. Ironically, it was the city’s lowest scoring in comparison to the other leading cities, contributing to its overall dip in the rankings.
Reflecting on its past achievements, Beijing reached its zenith with a No. 3 ranking in 2019. However, the city’s recent ranking has been affected by a decline in funding deals and successful exits. Taking a closer look at the data the report provides, during the 30 months leading up to the end of 2023, Beijing recorded 223 Series A deals, positioning it 11th globally, and marked only 60 exits, placing it 58th in the global standings.
The downturn in Beijing’s appeal to investors can be partly attributed to the Chinese government’s persistent crackdown on the technology sector, a move that has deterred investments away from what was once a hotbed for burgeoning unicorns – start-ups valued at over US$1 billion. Furthermore, the intensifying showdown between the US and China has imposed additional stress, tempering investor enthusiasm regarding opportunities in China’s capital.
An insight into the capital flow reveals that some US-based entities, particularly pension funds, have curtailed their investments in China. Factors contributing to this decrease include the imposition of US constraints on Chinese access to capital, talent, and technology, echoing sentiments from industry leaders and investment analysts.
Despite the hurdles, Beijing’s valuation in terms of ecosystem value paints a slightly brighter picture. According to the GSER report, from the second half of 2021 to the end of 2023, Beijing led Asian cities with an ecosystem value of US$525 billion. This figure nearly quintuples that of Singapore and decuples that of Tokyo, showcasing Beijing’s lingering influence in the tech sector. Within this timeframe, the city boasted 16 exits each valued at at least US$1 billion, a feat surpassed only by Silicon Valley.
The evolving dynamics of the global tech landscape underscore the resilience, adaptability, and competitive spirit of startup ecosystems worldwide. As geopolitical tensions and economic challenges continue to shape the field, cities like Beijing must navigate these complexities to maintain and enhance their standings as incubators of innovation and entrepreneurship.
