The 2023 Global Startup Ecosystem Report is a mixed bag for Pittsburgh

The annual ranking examines where startup hubs across the world stand in the way of performance, funding, market reach, and talent and experience.

The good news first: Pittsburgh is in the top 25 North American ecosystems in regard to funding, and in the top 30 North American ecosystems for performance, plus talent and experience.

The bad news: Over the past year, the Steel City fell 18 spots among “emerging” startups ecosystems overall. It ranked with a handful of other regions in the #31-40 spot among the top 100 emerging regions best poised to become global players.

Pittsburgh’s peers on the emerging list include Copenhagen, Hong Kong and Detroit. The top 30 list of already-emerged startup ecosystems includes those you might expect — Silicon Valley, New York City, London, Boston — with fellow Pennsylvania hub Philadelphia coming in at #27 overall.

In the way of positives, between 2020 and 2022, Pittsburgh created more than $11.8 billion in ecosystem value, measured based on the value of exits and startup valuation.

Additionally, while the ranking marks a decrease from its #13 spot in 2022 — after rising from the 23rd spot in 2021 — the report’s researchers still say the city’s advanced manufacturing and robotics, life sciences, and space tech sectors are a boon for the region in terms of talent and resources. These factors combined with resources such as the Pittsburgh Innovation District and a low cost of living are reasons why the report said founders should consider Pittsburgh, should they be in the market for new office space or a new HQ.

“When you ask US ecosystem leaders which cities they look to for best practice, they often say Pittsburgh,” said Marc Penzel, founder and president of Startup Genome, in a release. “The reason for this reverence: Pittsburgh’s entrepreneurial support organizations. InnovatePGH, a public/private partnership dedicated to leveraging the city’s R&D strengths, has a stellar track record of turning innovative ideas into successful startups.”

Despite the drop in rankings, stakeholders in the Pittsburgh tech community don’t see cause for concern. The reasoning for calm, according to Allegheny Conference on Community Development Chief Growth Officer Matt Smith, is that movement in rankings is “relative”: He told Technical.ly it was other cities producing unicorns, and not a fault of Pittsburgh itself, that allowed them to outpace Pittsburgh.

Matt Smith. (Courtesy photo)

Besides, Smith said, ranking or no ranking, Pittsburgh still had a lot of good to show for the past two years.

“The significant exits we saw in 2021 (e.g., Duolingo, Aurora, Cognition Therapeutics, Stronghold Digital Mining) gave our score a major boost for the 2022 GSER,” Smith wrote in an email. “The way Startup Genome calculates key factors like ecosystem performance, market reach, and even talent and experience are influenced by the number and size of exits in the ecosystem.”

Smith cited the city’s nearly $11 billion in ecosystem growth as further evidence that Pittsburgh is on the right track, as it’s a nearly 50% increase from the previous period.

The sentiment was echoed by InnovatePGH Ecosystem Director Jason Griess, who noted that Pittsburgh’s ecosystem has maintained a growth path since last year. Looking at the rankings overall, Griess said, the city is still in a competitive ranking set with other North American ecosystems. Plus, Pittsburgh isn’t alone in receiving a lower ranking compared to previous years.

“If you look at North American ecosystems, overall, you’ve seen a drop across the board,” Griess said. “Last year, Detroit was number one. Now it’s number three. Last year, Minneapolis was number four, they’ve dropped, Houston has dropped, the Research Triangle has stayed pretty steady.”

Ultimately, he said, the post-pandemic drop in VC funding being felt around the country has impacted all the ecosystems on the list.

“Pittsburgh is still on a growth path, but we have to double down on our efforts,” Griess said, “especially around funding and exits, if we want to improve our ranking on this particular report.”