Pittsburgh's placement on a global list of the best emerging cities to launch and run a startup company has fallen by a significant measure over the past year, but local industry experts aren't concerned much.
On Thursday, San Francisco-based innovation policy advisory and research firm Startup Genome unveiled its 2023 Global Startup Ecosystem Ranking of the 30 strongest cities to develop new tech companies as well as its Emerging Ecosystem Ranking of 100 budding ecosystems with the highest potential to be a global performer in the years to come.
In the latter of those two placement lists, Startup Genome gave the greater Pittsburgh region a technical rank of 35 (it put Pittsburgh in the 31-40 placement slot with 10 other cities that it ranked in an intentional and not alphanumerical way), which is down considerably from its placement of spot No. 13 in 2022 and spot No. 23 in 2021.
But according to Jason Griess, the ecosystem director at InnovatePGH, the advancements seen at other peer cities over the past year have likely eclipsed those that have taken place in Pittsburgh, but that isn't to insinuate that Pittsburgh isn't still growing in these metrics. In fact, Startup Genome found that Pittsburgh continued to improve in various metrics of startup-based support activity over 2022 despite the lower ranking on the global list of cities.
"Pittsburgh was ahead of the game when it came to intentional ecosystem building, and now other people have entered the race," Griess said before noting the progress seen at No. 19 Phoenix, No. 29 Tampa and No. 34 Orlando over the past year. "Ten years ago there was an ecosystem [in these other cities], but now there's an ecosystem [there] that has multiple initiatives from a lot of different partners who are intentionally building that ecosystem."
Per Griess, that means InnovatePGH—a public-private partnership based in Oakland that's looking to advance and champion the region's startup scene and one of three local partners that helped Startup Genome develop its report—needs to continue the work it's doing and bring more partners alongside it.
"Pittsburgh is maintaining a relative standing to the ecosystems in North America, except for Phoenix, Tampa Bay and Orlando," Griess said. "Those three have seen a rise in getting funding and exits. And if you dive into that, there's an intentional support system there that they've really hammered on in the last five years."
Added Sean Luther, executive director at InnovatePGH: "Our underlying numbers are continuing to show progress and look good. It's just that other people's numbers are looking better, faster."
Measured over a two-year span, Startup Genome's report for Pittsburgh found that the region's median Series A funding round for tech startups reached $9.1 million. That's higher than the global average of $6 million and a significant increase from the $4.7 million figure the Pittsburgh region had as a median in last year's report.
Venture capital funding for Pittsburgh startups during a 2018-2022 reporting capture period reached $9.2 billion, which is shy of the global average of $11.3 billion during the same period but an improvement of the $1.5 billion the region's startups secured between 2017 and 2021.
Griess said more than half of the ranking methodology relies on ecosystem performance, like the total funding raised, and its measurable success, like the combined value of startup exits. But those two metrics alone can't and shouldn't define a whole startup ecosystem, he said.
Luther backed that up and argued that getting caught up in those two metrics alone could be disadvantageous to the ecosystem as a whole.
"We're not going to teach to the test on this basis; it's not worth the ecosystem spooling up around specific points that Startup Genome is going to cook into their methodology," Luther said. "We need to continue supporting founders. We need to be investing in the ecosystem that makes that successful. And we need to continue prioritizing that tech-based economy as a real growth driver for western Pennsylvania and the collection of industries that can create the most economic opportunity for our residents."
Overall, Pittsburgh's total ecosystem value reached $12 billion, according to the report, up from the $11.6 billion it fetched in last year's study. Next year's report could potentially include more dire figures for many American cities depending on Startup Genome's methodology given the negative market conditions that have taken place across the U.S. economy over the past year, which have primarily affected the country's tech industry and its subsequent startup scene the most.
