The Seattle skyline. (GeekWire Photos / Kevin Lisota)

Seattle jumped three spots and moved into the top 10 of Startup Genome’s annual global startup ecosystem rankings.

The list ranks cities based on seven “success factors”: performance, funding, market reach, talent, connectedness, knowledge, and infrastructure.

“The ranking is primarily driven by one question: In which ecosystems will an early-stage startup have the best chance of building global success?” the report notes.

The top 5 startup ecosystems — Silicon Valley; New York City; London; Beijing; and Boston — held steady compared to last year’s list. Washington D.C. and Chicago jumped up in the rankings, while Austin and Denver fell a bit.

(Startup Genome Chart)

Startup Genome called out Seattle’s strengths in AI, big data, and analytics, as well as the city’s life sciences industry. It also noted “startup genealogy.”

“Founders can draw on legacy experience,” the report said. “Microsoft and Amazon, both headquartered in the Seattle region, have been the source of numerous spinoff companies directly (such as Expedia) and indirectly (such as Twilio). Together with spinoffs from the University of Washington, this record has given the region a rich genealogy of startups that become scaleups, begetting more startups.”

See the full report here.

Seattle and the state of Washington continue to be a national hub for STEM jobs, GDP growth, and venture capital investments in 2019, as noted in the latest Seattle Tech Ecosystem Report. Jobs in the information, communications, and technology sector grew faster than any other sectors, according to the state’s department of commerce.

Venture capital funding to Seattle-area startups reached a record-high $3.59 billion in 2019. The increased funding reflects the continued growth of Seattle’s robust tech ecosystem and interest in the region from investors across the globe.

Billion-dollar companies such as Convoy, Outreach, Auth0, Icertis, and others landed mega-deals last year.

Several startups across industries such as life sciences, real estate, biotech, retail, logistics, and more are waiting in the unicorn wings, including several on the GeekWire 200, our ranking of the Pacific Northwest’s privately held tech startups. Many are led by veterans of hometown tech giants Microsoft and Amazon, in addition to former employees of companies such as Facebook, Dropbox, Apple, and others that have large engineering centers in the Seattle area.

Local investors also planned to invest in more companies this year, and interest from out-of-town firms continues.

A combination of a critical mass of tech talent, local STEM programs, new early stage venture funds, angel investors with more cash, and maturing company-building support lead some to believe that Seattle’s startup scene is poised for unprecedented growth.

“There are numerous leading indicators that paint a picture of extraordinary acceleration of startup creation over the next few years.” wrote Jacob Colker and Oren Etzioni of the Allen Institute of Artificial Intelligence.

(Click to enlarge)

However, the impact from COVID-19 on Seattle’s startup scene remains to be seen.

Though local stalwarts Microsoft and Amazon have weathered the COVID-19 crisis and could end up with more market share when normalcy returns, the pandemic could jeopardize smaller tech companies. More than half of Seattle-area startup leaders surveyed in May by the Washington Technology Industry Association said that they have less than six months of cash runway remaining, and 23% have less than two months.

The Startup Genome report also noted that companies “are facing a double whammy with a drop in consumer demand at the same time VC investments are dropping, leading to a crunch for capital.”

Many companies are pulling back on hiring or laying off staff, though some are still adding new workers, including firms in sectors such as telemedicine and cloud computing.

The global pandemic might also impact the Silicon Valley engineering outposts that have added an interesting dynamic to Seattle’s burgeoning tech community over the past 15 years as companies such as Uber, Airbnb, and others trim their workforce.

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