The Startup Scorecard: How Governments Can Unlock Trillions in Innovation and Economic Growth

Nations that adopted startup-friendly policies mid-1990s or early 00s, and consistently implemented effective measures, are now reaping the rewards; seamlessly transitioning into digital economies and enjoying long-term benefits. Conversely, those that dragged their feet on economic development of startup ecosystems are now grappling with how (and in my experience, for the most part, are failing, trying to do it themselves).

The prosperity of economies and the well-being of future generations hinge on making substantial and immediate investments in building robust startup economies.

Startup ecosystems have become the primary engine of economic growth worldwide

Enter the APEXE Report—G20 Pilot from Startup Genome and the Global Entrepreneurship Network. This report isn’t a doorstopper; it’s a unique toolkit designed for development and innovation entities and national government agencies to cultivate startup ecosystems. It introduces the first-ever balanced scorecard to evaluate a country’s effectiveness in converting its innovation potential into startup ecosystem performance, a process aptly dubbed “Lab-to-Startup Conversion.” Additionally, it provides a strategic guide to inform future policy action.

Startup ecosystems generate immense value by creating novel products and business models that spawn jobs, enhance corporate competitiveness, drive economic growth, and tackle social challenges. For a city, a portion of this value can be quantified by its startups’ ecosystem value (EV)—a standardized measure created by Startup Genome to benchmark local startup ecosystems. While GDP measures production rather than asset value, the ratio of EV to GDP serves as a useful gauge, revealing significant variations across the G20.

Take a look at the chart they put together. In R&D and most innovation rankings, both South Korea and Germany frequently rank among the top in the world, as do Australia, the U.K. and the U.S. But if you’ve followed me for long, you’re well aware that I push us to appreciate that tech, venture capital, or innovation, alone, are misleading indicators of entrepreneurship and the potential for founders to create jobs. Hence my interest, and hopefully yours, in this methodology, also looking to a Startup Ecosystem Score, which seems to reveal accurate where the rubber hits the road (with both measures plotted).

The Innovation Potential Score captures factors quantifying and influencing traditional innovation, including patent production, talent quality, economic strength, corporate fabric, and business-friendly laws, reported Startup Genome. While I’d vehemently argue that patent production is not a positive indicator of entrepreneurship, I realize that’s a contested question. APEXE also provides a scorecard of a country’s recent startup policies and initiatives against best practices codified by Startup Genome over the last decade. These practices are based on insights measured, advised, and learned from 85 ecosystems in 45 countries, including the world’s top performers.

The disparities between leading and lower-performing countries represent substantial opportunities. If the underachieving G20 nations could elevate their EV/GDP ratios to the average, we could witness, according to Startup Genome, an astounding $2.7 trillion surge in ecosystem value within the global startup economy. But how can we assess the extent to which countries are maximizing their potential for startup performance, and what steps can they take to improve?

The APEXE Report offers a meaningful perspective on startup ecosystems at the national level, establishing another data-driven, reproducible framework to help countries evaluate their startup policy actions, identifying how they can unlock innovative entrepreneurship by assessing how effectively they utilize their potential.

“Our scorecard of startup policy action – which can be considered a leading indicator or “vector” of future startup ecosystem performance – shows South Korea now slightly outperforming Germany thanks to its investments in startup policies and initiatives,” wrote JF Gauthier and Christopher Haley, both of Startup Genome, with World Economic Forum. “This suggests South Korea’s Lab-to-Startup position should improve in the future and earn it a final APEXE rank of 5 versus 9 for Germany.”

Which is referring to the final G20 APEXE ranking (a score), each of which is then broken down into multiple dimensions to provide an actionable scorecard for policy action.

Now, let’s address the elephant in the room: the role of creativity and the so-called “creative class,” as well as what might (or should) comprise that Startup Ecosystem Score. Countries like China and India, despite their massive populations and burgeoning economies, often struggle with innovation. Not for lack of talent or resources, it’s arguably due to cultural and systemic factors that stifle creativity. In contrast, nations like France and Germany, while rich in culture and history, face challenges in their startup ecosystems. Bureaucratic red tape, risk-averse mindsets, and rigid structures can impede the agility and innovation that startups require. You can see the implication of that on the chart, in comparison to the U.S. and U.K.

Leaving us with two scores I’d criticize as being weighted too little. Global Reach should be far more substantial, as we see throughout ecosystems in the U.S. that the perception founders have about being globally disruptive vs. locally validated, changes everything. An ecosystem that isn’t oriented globally is all but irrelevant save for the rare exception that breaks out of the norm. As for Programming, I can speak from experience that this measure needs rigor because many such programs are self-titled, most are poorly run or lack curriculum, and we can all point to a program that is clearly more of a problem than benefit; and yet, more than most of what’s here, to have an ecosystem, we need these Startup Development Organizations in place.

What Cities and Countries Should do to Foster Startups

Granted here, my take, drawn from what I’ve been digging into the APEXE Report—G20 Pilot and my own work and experience consulting for governments:

• Adopt and Sustain Startup-Friendly Policies – Cities and countries must commit to long-term, startup-focused economic policies, rather than short-term, politically convenient gestures.
• Reduce Bureaucratic Barriers – Heavy regulation, risk-averse mindsets, and excessive red tape suffocate startups. Countries like Germany and France suffer from this, while South Korea’s aggressive policy shifts enabled rapid ecosystem growth.
• Invest in Early-Stage Capital Access – Funding must be plentiful at the seed and early stages, not just for unicorn-chasing venture capitalists. As you should know, this calls for drawing it (explained here), not pushing for it.
• Develop High-Quality, Creative Talent, Not Just More STEM – Measuring ecosystem health by the number of engineers is misleading. Countries need experienced founders, marketers, storytellers, serial entrepreneurs, and startup-savvy professionals.
• Encourage Global Orientation – Startup ecosystems that think locally instead of globally are doomed to irrelevance. The best-performing ecosystems study the market globally, assess competitors everywhere, cultivate global networks, and serve customers from anywhere.
• Reevaluate What ‘Performance’ Means – And I’m not saying this of my assessment of the APEXE methodology, I am saying this to you all – reevaluate YOUR measures of performance. Most cities celebrate # of meetups, having a startup hub, and that incubators are holding demo days, stop it, those are vanity measures.
• Support Effective Startup Development Organizations (SDOs) – Incubators and accelerators are crucial, but too many programs are selling services with no real impact. Support should be tied founder success far greater than average.
• Measure and Adjust Policies Using Real Data – The APEXE framework provides a balanced scorecard for evaluating startup ecosystem health, awesome regardless of my questions and concerns! Use it. Governments must track and refine their strategies based on actual performance, not headlines and public sentiment.
• Foster a Culture of Creativity and Risk-Taking – China and India struggle with true innovation because of cultural and systemic constraints. Innovation flourishes in environments where failure is acceptable, and creativity is nurtured.
• Make Founders the Priority, Not Institutions – A startup ecosystem isn’t about venture capital firms, research institutions, or government agencies patting themselves on the back. It’s about empowering entrepreneurs to build, fail, and succeed.

And one more, a big one which I’ve talked about a lot: Specialize, rather than trying to be the next Silicon Valley, startup epicenter, or tech hub.

For a deeper dive into the APEXE Nations Report and its implications, you might find their launch webinar insightful: