Silicon Valley-based start-ups raise, on average, a third more capital than those in other areas, the report, conducted by research firm Startup Genome and funded by Spanish group Telefonica, said.

Silicon Valley continued to lead in metrics including the amount of serial entrepreneurs, revenue models, and the level of education among business founders. Tel Aviv was ranked second, followed by Los Angeles, Seattle, New York and Boston.

"Some years ago it was only Silicon Valley. Now there are also other innovation hubs and this trend is only going to strengthen," said Gonzalo Martin-Villa, chief executive of Wayra - a Telefonica unit that nurses start-ups.

"Flourishing communities in Latin America, Europe, the Middle East and Asia have grown considerably over recent years and are now beginning to challenge Silicon Valley's domination in technology innovation," the report said.

Phil Liblin, chief executive of Silicon Valley-based writing app maker Evernote, said in a recent interview: "Silicon Valley does have a lot of magic in it. It is still the only place you can get $20 million without owning a suit, but you do not need 20 million any more."

The proliferation of Apple and Google app stores, Facebook and Twitter have enabled starting a global company with just $50,000 or $100,000, he said.

"I think the main structural advantages are disappearing. Silicon Valley's greatest innovation in the last couple years have made itself less unique."

(Reporting By Tarmo Virki; Editing by Dan Lalor)

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