Home Digital The State of the Startup Ecosystem

The State of the Startup Ecosystem

Startups operate in every state and every congressional district across all sectors of U.S. industry. They are impacted by policymakers’ decisions across a range of issues, yet their perspective can be left out or misunderstood by policymakers—especially in debates that center around large tech companies. For example, concerns about the state of competition in the technology sector, debates about intermediary liability frameworks, or conversations about a federal privacy law can often fail to reflect the consequences of policy changes on the startup ecosystem.

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Along with listening to startup voices and crafting policy with startups in mind, it is essential that policymakers are able to understand and monitor their impact on startups. Yet the data necessary to understand those impacts is missing. Indeed, there is surprisingly little agreement as to the current health of the startup ecosystem. Advocates and researchers often turn to proxies that are ultimately inadequate in the context of today’s active tech policy conversations. Some advocates will cite generic business formation statistics to assess the health of startups, but this overbroad approach captures data about any newly formed business and fails to provide a crisp picture of emerging tech startups. Data highlighting trends in startup financing, growth, and exits are publicly available, but this information has not been compiled and analyzed in ways that help policymakers, researchers, and advocates consider specific questions.

Through this report, Engine seeks to narrow this knowledge gap by providing an empirical survey of the startup landscape to generate a better understanding of the health of U.S. startups and inform a range of public policy debates. The report studies startup health by evaluating trends in startup fundraising across several stages, assessing individual U.S. ecosystems, analyzing startup exits, and contextualizing the capital needs of the average investor-backed startup.