The 2021 Global Startup Ecosystem Report from Startup Genome is here, and Pittsburgh stands out both in the U.S. and beyond.
Overall, Pittsburgh came in at #23 on the report’s list of emerging startup ecosystems, surpassing international cities like Milan, Moscow and Hamburg as well as domestic ones like Phoenix and Tampa Bay. Only 28 American cities total were mentioned in the report. The Steel City also ranked in the top 30 of both regional ecosystem funding and regional ecosystem talent and experience, as well as in the top 20 for global emerging ecosystem funding.
“The U.S. News and World Report rankings are to colleges and universities as it is to us for the Global Startup Ecosystem,” Sean Luther, executive director of InnovatePGH, said of the report’s release. Important to note, he added, is that Startup Genome compiles data within a 100 kilometer radius of city center, so Pittsburgh’s numbers include a large portion of Southwestern Pennsylvania as well as parts of northern West Virginia, but no parts of Ohio.
Each city across the emerging markets was ranked in performance, funding, market reach, and talent and experience on a scale from one to 10; Pittsburgh scored seven, nine, eight and five out of 10 in each of those categories, respectively.
“Honestly, as an investor who’s been working here for close to 10 years, it comes as no surprise that Pittsburgh punches way above its weight in terms of opportunities for investors,” said 412 Venture Fund Managing Partner Ilana Diamond in a conference call on the report. “For a city of our size, Pittsburgh has an outsized innovation ecosystem.”
The numbers back up Diamond’s comments. Startup Genome listed Pittsburgh as having a total ecosystem value of $5.2 billion with $180 million of early-stage funding available. The city’s average software engineering salary of $81,000 is nearly double the global average of $44,000. The median Series A round funding of $3.4 million also surpassed the global average of $3 million, and local venture capital firms Black Tech Nation Ventures, Innovation Works and Magarac Venture Partners were named as key players in driving that growth. (Notably, though, the report puts Pittsburgh’s median seed round at just $75,000, compared to a global average of $480,000.)
“In addition to Startup Genome, virtually every major think tank in the U.S. now indicates that regional, and even national economies are driven by strong startup ecosystems,” said Rich Lunak, the president and CEO of accelerator and investment org Innovation Works. Pittsburgh’s is particularly strong in advanced manufacturing and robotics, life sciences and cleantech, demonstrating multi-faceted success that’s only expected to increase.
“Personally, I think we’re capable of being one of the top global hubs for technology and entrepreneurship, building off of those roots, and we’ve got a lot of momentum,” he added, mentioning the recent public offerings from Duolingo, Cognition Therapeutics and autonomous vehicle companies this summer.
The big successes make room for smaller ones, too. Kathryn Fantauzzi, the cofounder and CEO of medical device company and University of Pittsburgh spinout Apollo Neuro, said that since starting basic research in 2014, the concentration of talent in a smaller city has helped her build connections and grow a team.
“Pittsburgh really cares about Pittsburgh,” she said, emphasizing that spirit doesn’t always exist in other cities. “And that really matters because people are very supportive of each other and look to help businesses grow.”
Having those local resources is important even in a time when companies are questioning the need for in-person offices. Pittsburgh’s ranking in this report will not only draw in new investors and founders, but give a focus to continuing the growth of tech talent coming out of Pittsburgh as well: “Even remote workers need community, they need ecosystems that depend heavily on place,” said Mark Thomas, the president of the Pittsburgh Regional Alliance. The city’s ranking and other highlights of this report demonstrate why companies should look to bring that community and physical space — no matter how small — here.
Still, while many cheerleaders for Pittsburgh tech believe it has the potential to be an even bigger global competitor, there are also questions of what it will take to lose the word “emerging” from the ranking title. Though there are a lot of moving parts needed to get Pittsburgh to more of a top status, Thomas has an idea of what that success will look like.
“You’ll see more startups, more VCs, more ecosystem organizations,” he said, adding that more real estate investments and completion of projects like the one at Pittsburgh International Airport. “You’ll see all of this stuff that will really reflect a greater density of activity.”
Sophie Burkholder is a 2021-2022 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Heinz Endowments.-30-