Building an entrepreneurial ecosystem is about a lot more than education and science funding

The United States has about 4 percent of the global population and accounts for nearly a quarter of global GDP. Yet the US is home to half of the world’s unicorns, or privately held startup companies valued at $1 billion or more. As of this last August, according to CB Insights, there were 801 unicorns around the world, with a cumulative valuation of some $2.6 trillion. The US has the highest number of unicorns at 402, followed distantly by China (158), India (40), and the UK (31). Pretty impressive for being a “failed state” as some domestic critics contend.

So what’s America’s secret? One obvious answer is that a lot of ambitious and talented people come here from elsewhere. But let’s dig deeper on that. Consider the following: The US doesn’t look particularly remarkable if you judge it by various global rankings in areas such as innovation and education. Yet Annamaria Conti (HEC Lausanne) and Jorge A. Guzman (Columbia Business School) note in their 2019 paper “What is the US Comparative Advantage in Entrepreneurship? Evidence from Israeli Migration to the United States,” America’s “entrepreneurial ecosystem is considered to be relatively more successful. Indeed, every year a substantial number of startups from highly-innovative economies relocate their headquarters to the US, raising the question of what advantages the US entrepreneurial ecosystem offers relative to these economies.” (Thanks to Ethan Mollick on Twitter for the pointer.)

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