Toronto’s startup community has been somewhat deflated by a recent blog post from the Startup Genome project.

The irony is that Startup Genome had been the source of that misplaced pride just several days prior. The European researchers unveiled a list of 25 startup ecosystems with a detailed post on TechCrunch. The list featured the usual players at the top of the list – Silicon Valley, New York City, and London, England. But many were surprised to see Toronto placed just after those hi-tech meccas in the fourth spot on the list. The story was picked up by many media organizations and blogs covering Toronto’s startup scene, including ITBusiness.ca in a brief that I wrote.

Headlines on those sites took the list at face value and reported that Toronto had been ranked as the “fourth-best startup eco-system in the world.” But that turns out to be a misnomer. The researchers didn’t intend for the list to be a ranking of the top 25 startup eco-systems around the world at all. Rather, it was just a tabulation of the number of businesses that have used Startup Compass – a tool the researchers developed to allow startup firms to benchmark themselves compared to others.

“This list should not, and wasn’t intended to be used to determine which ecosystem is best,” Max Marmer writes in the blog post. “Activity is simply one factor to determine the quality of an ecosystem.”

Brian Jackson, Associate Editor, ITBusiness.ca
Brian Jackson, Associate Editor, ITBusiness.ca

So the list simply tells Toronto it is the fourth-best user of a Web tool with about 100 firms registering with it, not the fourth-best startup eco-system in the world. Vancouver and Montreal were also ranked further down on the list, and have far fewer users registered.

I can see how the error transpired. Even TechCrunch framed the list as presenting the world’s best startup eco-systems. It also contained a comparison of the top three eco-systems across several metrics such as number of companies started and the success rate of those startups. Silicon Valley dominated those metrics over New York and London, and New York also performed better on those marks than London. So the logical deduction was that the rest of the list was ranked based on those same metrics. But it wasn’t.

Researcher Danny Holtschke filled me in on this last week over a phone call. It’s one I now wish I placed when first reporting on the story. But Danny is based in Germany, six hours ahead of my time zone, meaning I wouldn’t be able to interview him until the next day. The pressure to report the news won out and I went with the information available on TechCrunch’s post and the Startup Genome site.

It also raises new questions about how Toronto’s eco-system will stack up against other cities on the list once the researchers have more opportunity to flesh out the details. The Startup Genome team is not only doing research based on its Startup Compass tool, but is also conducting qualitative interviews to assess the cities (I provided one myself about Canada’s startup supports in general). So given some time, the project will reveal a true ranking for Toronto compared to other cities.

Then we’ll see if our collective pride can be re-inflated.

 

 

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