Startups

Pittsburgh jumps to 13th place on Startup Genome’s list of top emerging startup ecosystems

The latest report from Startup Genome puts Pittsburgh in the top five of emerging ecosystems in the United States.

Venture capitalists discuss the future of local investing at the inaugural RustBuilt Pittsburgh conference.

(Photo by Josh Lucas via Twitter)

The Steel City keeps upping the ante as it pushes to be a global startup hub.

Pittsburgh ranked 13th in the top 100 emerging startup ecosystems on the latest release of Startup Genome’s Global Startup Ecosystem Report (GSER), moving up 10 spots from its 23rd place ranking in the last release of the report in September 2021. This year, Pittsburgh surpassed Portland, Dubai, Wuxi, Madrid, Bristol and others it fell behind last year.

Among the American cities ranked ahead of it were Detroit — which clinched the number one spot from Mumbai — Minneapolis, Houston and the Research Triangle in North Carolina, which means that Pittsburgh ranked in the top five of emerging startup ecosystems in the United States. (The top 30 list of already-emerged startup ecosystems includes those you might expect — Silicon Valley, New York City, London, Boston.)

The GSER provides each city with a numeric score for performance, funding, market reach, and talent and experience. In the last report, Pittsburgh received scores of 7, 9, 8 and 5 respectively; this year saw those numbers increase across almost every category, with Pittsburgh receiving scores of 9, 9, 10 and 8, respectively.

“While we haven’t seen the granular, raw data that feeds the Startup Genome scores yet, I think the significant exits we saw in the last year (e.g., Duolingo, Aurora, Cognition Therapeutics, Stronghold Digital Mining) gave our score a huge boost,” InnovatePGH Ecosystem Director Jason Griess said in an email to Technical.ly. “The way Startup Genome calculates key factors like Ecosystem Performance, Market Reach, and even Talent + Experience are all influenced by the number and size of exits in the ecosystem.”

InnovatePGH, Innovation Works and the Pittsburgh Regional Alliance are all Startup Genome members and collaborated with the organization to promote the release of this latest report.

Advertisement

Read the report

Where Pittsburgh gained funding ground

According to Startup Genome, Pittsburgh more than doubled its total ecosystem value over the past year, jumping from $5.2 billion to $11.6 billion, compared to a global average of $28.6 billion. It also upped the amount of early-stage funding available from $180 million to $196 million — thanks at least in part to the number of new early-stage investment funds that have cropped up over the last two years.

But despite increasing the amount of funding available, the median seed round and Series A round amounts for the city either decreased or were on par with global averages. While the global average for median seed round amounts increased from $480,000 to $671,000, that same measure for Pittsburgh fell from $75,000 to $50,000, indicating a serious drought in funding opportunities for the earliest ventures here. As for Series A rounds, the last report put Pittsburgh’s $3.4 million median above the global average of $3 million. Both of those numbers increased to $4.7 million this year, putting the city on par with global averages.

And while Pittsburgh once again surpassed global averages for software engineering salaries with an average of $80,000, the city still lags behind on other significant metrics.

Exits needed

From 2017 to 2021, Pittsburgh had around $1.5 billion in total venture capital funding while the global average for that statistic was $4.5 billion. The time it takes for Pittsburgh companies to exit is about 10.4 years, longer than the global average of 9.4 years. That means that while Pittsburgh’s tech economy is rapidly growing, it’s still struggling to bring in large amounts of capital that can scale companies quickly.

That was a notable complaint of Josh Fabian, founder of 2022 RealLIST Startups honoree. And Griess agrees that in order for Pittsburgh to break free of its “emerging” title in the GSER, it will need to address those challenges.

“Simply put, we have to be ranked in the top 40 Global Ecosystems on performance,” he wrote in response to a question of what Pittsburgh needs to do to lose the “emerging” title. “That means our Ecosystem Value, Exits, and Startup Success should be on par with the top ecosystems. To get there, we need to see a larger volume of high-value exits.”

Looking up

There are several signs that Pittsburgh is well equipped to get there. The GSER once again named key ecosystem players like Carnegie Mellon University, University of Pittsburgh, LifeX, Ascender and the Pittsburgh Robotics Network as leaders of collaborative innovation and community building. And while robotics was of course recognized as one of the city’s strengths, so were the local life sciences and cleantech industries.

As for why startups should move to Pittsburgh, the GSER pointed to its combination of high quality tech talent and overall affordability, making it competitive with top tech markets that have high rent prices. The Pittsburgh Innovation District, too was highlighted for its efforts in uniquely bringing academia and commercial innovation together.

Looking ahead, Griess thinks funding should be the focus.

“Some areas of opportunities the report highlights are around early stage funding,” he wrote. “Our total early stage funding and our median seed round are below the global average, which is something our community has been working on in various ways. Staying focused on that issue over the next year can help maintain our momentum and growth.”


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.
Companies: InnovatePGH
-30-
Subscribe to our Newsletters
Technically Media
Connect with companies from the Technical.ly community
New call-to-action

Advertisement