The combined value of startup ecosystems across the globe fell drastically. This was the first time since 2020 that total value of these ecosystems shrank. Artificial intelligence AI has remained the most influential force, redefining the entire field of transportation. Despite this contraction and a broader funding winter, it produces new opportunities for innovation. Silicon Valley reaffirms its dominance as the world’s top startup ecosystem, aided by its share of AI-native startups.

The global startup ecosystem is facing headwinds. This is the first year in four years that the overall value has dropped. First and foremost among these, a 31% decline in large exits. On top of that, the pace of new unicorns has shrunk too.

Silicon Valley’s dominance in the AI sector has been a key component of its ongoing success. It’s a huge draw for investment and talent that the region has an established tech infrastructure and culture of innovation.

New York City is quickly becoming a serious challenger, continuing to close the gap and even overtaking London in this race for second place. For the last four years, New York City and London have been locked in a tie for the number two spot.

Other cities have made remarkable progress within the startup ecosystem rankings. This means that Columbus, Ohio, has now earned its way into contention for the 51st to 60th place range. Now its peer cities have become Nashville, Pittsburgh, Sacramento and Tampa Bay. Columbus’ $40 million award ranks them second internationally, along with Abu Dhabi, Bangkok, Bogotá, Chengdu, and Prague.

Although the US and China may lead the pack in overall AI investment, other regions have shown explosive growth in AI-focused startups. Today nearly 90% of AI funding is still concentrated in the US and China. Collectively, the US and China account for 22% of all native AI startups in the world.

Cities such as Delhi, Istanbul, Paris and San Diego are experiencing a renaissance built around AI-native startups. From 2021 to 2024, the count of these innovative small companies has more than doubled! For the metro areas of Toronto-Waterloo, Shenzhen, Shanghai, and Mumbai, financing for AI has shot up in a spectacular trajectory. From 2022 to 2024, it provided these cities with over 10x the funding.

This data paints a telling picture of where AI innovation is spreading to across the country. While established tech hubs maintain their lead, emerging ecosystems are quickly catching up, fueled by increasing investment and entrepreneurial activity in AI.

We can look at these same values in terms of their aggregate exit value, which peaked in 2021 with 3,531 exits totaling $973 billion. Startup Genome doesn’t see such a big drop, forecasting 3,008 exits worth $237 billion by 2025.

According to JF Gauthier, the rapid growth of tech creates disparity between cities.

"A lot of people are unhappy because they were doing well in their job, their city was doing well, and suddenly they’re doing less and less well, and they don’t know why," - JF Gauthier

Gauthier elaborates on the competitiveness issues facing cities that don’t have a major tech hub.

"They blame the government, but it’s not the government’s fault; it is that tech is growing four to five times faster than the rest of the economies, those cities that have a lot of tech are booming, and that creates a lot of disparity. Those cities that don't have a lot of tech are losing their best engineers, their best people." - JF Gauthier

Gauthier advises cities to prioritize investment in entrepreneurial AI.

"You need to act; you need to start investing massively, as much as much as you can, into an entrepreneurial AI because buying infrastructure is just sending more money to Seattle and Silicon Valley," - JF Gauthier

"You need to start with AI," - JF Gauthier