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America Is Losing Its Edge for Startups

It used to be that 95 percent of global startup and venture-capital activity happened in the U.S. Today, it’s just over one-half.
Shen Haiyin, the co-founder and CEO of electric-vehicle startup Singulato, attends the launch ceremony of an electric SUV in Beijing in April 2017.
Shen Haiyin, the co-founder and CEO of electric-vehicle startup Singulato, attends the launch ceremony of an electric SUV in Beijing in April 2017.Jason Lee/Reuters

Lately, there’s been talk of a shift in innovation and high-tech startups from expensive, increasingly unaffordable hubs like Silicon Valley to more affordable, up-and-coming locales such as Pittsburgh, Detroit, Cincinnati, and Nashville. I’m all for it: Having spent nearly two decades in Pittsburgh at Carnegie Mellon University, I have long been a fan of the incredible innovation capacity and entrepreneurial potential of that great city.

But according to new data I analyzed with my colleague and collaborator Ian Hathaway (a leading expert in entrepreneurship and venture capital), the more troubling reality for the United States is that an even bigger “rise of the rest” is occurring in cities in Asia, Europe, and elsewhere in the world. Our report released on Friday compiles the most detailed data yet on global startup cities, tracking venture-capital investment in nations and cities around the world. Using data from PitchBook, a leading source of information on venture-capital investment, it tracks that investment in more than 100,000 startup companies in 300-plus global cities over the period 2005 to 2017.