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Tue. Jun 18th, 2024

Seattle drops to 20th place in the global startup ecosystem ranking | Washington

By meerna Jun12,2024

(The Center Square) – Seattle remains in the top 20 in Startup Genome’s annual “Global Startup Ecosystems Report” – but just barely.

In this year’s report by a research company from San Francisco, the Emerald City dropped 10 places to 20th place. The test, which has been operating for over a dozen years, creates a ranking of the 40 largest technology startup centers in over 300 ecosystems around the world, collecting data on 4.5 million startups. According to the Startup Genome model, a higher position in the startup ecosystem translates into a better chance for an early-stage startup to achieve global success.

A startup ecosystem is a network of people, organizations, and resources that work together to create an environment for startups to thrive.

Silicon Valley took first place in the Startup Genome report. In second place were London, New York, Tel Aviv and Los Angeles.

The report found that Seattle’s decline was the largest among the 40 largest ecosystems.

“The company’s ten major exits in the 30 months to the end of 2023 ranked 26th globally,” the report said. “In 2023, he only had two.”

A startup exit occurs when the startup owner and investors sell their ownership or shares of the company to another entity, such as a larger company, in order to obtain a profit or loss.

“The ecosystem overall is in a downturn as Series A transactions have also slowed,” the report continues. “In 2022, Seattle startups secured 53 Series A deals, 6th among U.S. ecosystems, but in 2023 that number dropped to 25, 10th among U.S. ecosystems.”

Series A financing represents an investment in a private start-up company after it has demonstrated progress in building its business model and demonstrated the potential for growth and revenue generation. It often refers to the first round of venture capital that a company raises from seed investors and angel investors.

The report indicated that late-stage startups in Seattle were more successful: “In 2023, Seattle startups closed 49 late-stage (Series B+) deals, ranking 5th among U.S. ecosystems . With startups like AvalynPharma (inhalation therapy), Key Commware (network connection) and Stoke Space (aerospace), all of which will receive $100 million in late-stage rounds in 2023, Seattle has shown it can still create scalable Deep Tech startups.”

Center Square reached out to Patrick Connor, director of the Washington State National Federation of Independent Business, for comment on the Startup Genome report.

Connor referred to the April NFIB online article based on a report by Eton Venture Services, which placed Washington state in last place in terms of the number of business start-ups, based on June 2022 data from the US Bureau of Labor Statistics.

The same online article noted that Forbes.com published a report that ranked Washington, D.C., as the 48th best place in the nation to start a business.

In the article, Connor highlighted Washington’s tax and regulatory burdens, including the highest state minimum wage in the country; business and professional activity tax equivalent to over 15% of corporate income tax, the highest in the country; employee payroll taxes 33% higher than the national average; maximum weekly unemployment insurance benefits and tax rates among the highest in the U.S.; and mandatory paid sick leave.

It wasn’t all bad news for Seattle in the Startup Genome report.

Acknowledging Seattle’s slippage compared to previous years, Startup Genome said Washington’s largest city continues to be a “first-class innovation center” with “incredible depth of talent” and “the perfect breeding ground for future unicorns.”

“Unicorn” is a term used in the venture capital industry to describe a startup company valued at more than $1 billion.

By meerna

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