Although the United States continues to be the most favorable market for getting a new tech company up and running, the country’s leadership on the global innovation map is no longer uncontested. Both investors and founders of tech startups are increasingly looking to Singapore, Hong Kong and Switzerland as attractive destinations for their projects, according to The Draper Innovation Index (DII), an integrated research project conducted by the Draper Hero Institute. The think tank’s founder Tim Draper is a pioneer in the US venture capital business and co-founder of Draper Associates, a venture capital firm.
According to the study, the top ten favorable markets for startups also include the UK, Sweden, Poland, Germany, Iceland and Canada. Israel ranked 27th on the list, and China did better at 13.
The research team studied the markets in 228 countries, from the US and China to the Republic of Chad and Ethiopia. A wide range of metrics and indicators was assessed for each of them, including national regulation features, the transparency of public administration, the level of economic development, the investment climate, and even the attitude towards cryptocurrencies. A comprehensive analysis generated some important conclusions about each of the markets’ environment for developing tech startups.
The Draper Innovation Index is an open interactive database with details on each of the ranked markets. The DII is a good source of advice for choosing where a tech startup will most likely thrive, including the most favorable region for a specific industry.
The index is based on several market evaluation scenarios: in addition to the general, or balanced, ranking, the project evaluates the markets based on public administration transparency and trust in local government. Growth and development potential is another aspect under review. Countries may rank very differently for each of these criteria.
For example, China’s development potential has the second highest ranking after the United States. However, its governance quality ranking is as low as the 51st on the list. The United States is at the top of the world across all the three criteria.
The DII also looks at the conditions existing for launching an innovative business at the state level. Washington, Florida and Texas boast the best startup climates. According to the index, all of them managed to surpass the Silicon Valley in California in terms of the conditions for the launch and development of innovative tech projects.
The Draper Innovation Index puts the Russian market in the 155th place. According to the index’s authors, it is due to the insufficient level of the development of the innovative environment (3.7 points out of 100), as well as the low potential of the venture capital market (0.3 points out of 100). At the same time, the market shows a high level of economic and social development (66.6 and 77.5 points, respectively). The level of “friendliness” towards cryptocurrencies is also relatively high (40.5 points).
As for the former Soviet republics, Tajikistan is the lowest ranked country and takes the 191st place, while Lithuania is on top and ranks 23rd. Estonia ranks 30th, the Republic of Belarus ranks 37th, Latvia ranks 41st, and Kazakhstan ranks 53rd on the list. Uzbekistan is five points ahead of Russia.
According to DII, Venezuela, Eritrea, the Republic of Chad and the Republic of Burundi are the least suited countries for innovative development.
By Olga Blinova