Silicon Valley, once the cutting-edge frontier for tech start-ups, has experienced a major slowdown in series A and B funding since its monthly peak in August 2021, according to the 2023 Global Start-up Ecosystem Report (GSER).

The home of Apple, Amazon and Google contracted 75% for Series A deal count and 73% for Series B between Q1 2023 and Q3 2021 – more than the average global decline of 69% for Series A and 72% for series B.

This slowdown has been attributed to the very success of the technologies produced there, which have allowed for remote working, outsourcing, and automation.

However, while North America experienced a 26% decline in early-stage funding, Europe achieved a new record in series A deal count, increasing 9% from 2021 to 2022, according to the 2023 GSER.

Europe also took up the slack in the number of unicorns produced, increasing its global share from 14% to 20%, while North America’s share declined from 58% to 52%.

Despite macroeconomic headwinds and continued geopolitical tensions, 2022 was Europe’s second-biggest year for venture activity, with deal count and value surpassing pre-2021 numbers.

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By GlobalData

Europe is also the most represented region in the emerging ecosystems ranking, expanding its share of the total emerging ecosystem value of $1.5tn from 37% to 41% between June 2022 and June 2023.

The democratisation of global tech hubs continues

The recent downturn in Silicon Valley’s share of VC funding is a continuation of a more general democratisation of global tech hubs that has been underway since the 1990s, as more startup ecosystems are taking hold globally and North America’s are diversifying.

However, despite the departure of 91,000 people from the hub over the past two years and recent high-profile layoffs, Silicon Valley remains at the top of the global startup ecosystem ranking, benefitting from an established reputation, access to funding, a high level of knowledge and connections.

And, the tech start-up capital of the world may yet see an AI-fuelled rebound, as a constellation of AI start-ups follow in the wake of disruptor, ChatGPT maker OpenAI.