Most big cities, from Madrid to Singapore and Beirut, now have sizeable startup ecosystems. They are home to thousands of VCs, accelerators, and caffeinated startup founders and their teams. Every year, millions of hopefuls take a stab at their dream venture launching an astounding 100 million businesses annually, just around 3 businesses per second. Unfortunately, 90 percent of these startups fail, yet an impressive amount of money is still being invested in them. Furthermore, according to the 2015 edition of the Global Entrepreneurship Index, the fastest growth of entrepreneurship is taking place in the MENA region despite political turmoil.
The main reason for this startup explosion is that startups may be built for thousands, rather than millions of dollars, as they did in the past. Cloud computing and coding have become so abundant and cheap as well as the Internet itself, which is much faster than it was, is universal and wireless. Today’s lean startups can outsource most of what they do, and no longer have to operate their own servers.
Since it does not cost as much to produce a startup, we’ve seen new types of investors come about such as angels, micro-VCs, and accelerators. Many startups don’t need a large amount of seed funding, so these investors can invest in a big number of smaller companies rather than pump millions into one company.
Another factor in the startup explosion is a cultural shift in attitude. Parents used to consider that getting a traditional job was a safer bet, discouraging young people from starting up their own ventures. With the rise in youth unemployment in many countries today, entrepreneurship is being promoted to create jobs for the growing youth population.
With the cost of entry-level for startups at an all-time low, funding for early-stage startups more available than ever, the world becoming a single market, and baby-boomers creating job opportunities, it seems rather unlikely that the startup movement will die out soon.
