Sydney's startup ecosystem and the state of now
The latest Startup Genome Global Startup Ecosystem Report ranks Sydney as the 23rd best startup ecosystem in the world, down 6 places from 2017. Although the report says Sydney's ecosystem is still growing and has historically high performance, funding for startups compared to other top ecosystems is considered “static”.
Startup Genome compiles independent research with data from more than a million companies across 150 cities.
UTS and StartupAUS are the Startup Genome Members in Sydney. Here’s a snapshot of the report’s findings as well as insight from StartupAUS CEO Alex McCauley and UTS Deputy Vice Chancellor, Innovation and Enterprise, Professor Glenn Wightwick.
Sydney’s global ranking
The report describes Sydney’s fall from 17 to 23 in Global ecosystems as a relative drop in ranking.
"There are two main reasons for this. First, four ecosystems making a debut among the top (Denver-Boulder, Lausanne-Bern-Geneva, San Diego, Washington D.C.) have risen past them. Of these, three have a top 20 Life Sciences ecosystem, which neither Vancouver nor Sydney has. Second, compared to other top ecosystems, their levels of Funding are static. As we demonstrate below, even if we had excluded Life Sciences from this analysis, Vancouver and Sydney would still have fallen."
StartupAUS CEO Alex McCauley: “This result is disappointing, but it’s not a surprise. Reports like this remind us that local growth is great, but this is a global race with very real prize money and lots of competitors. We need consistent, long-term support to ensure we’re a genuine contender”.
Deputy Vice Chancellor of Innovation and Enterprise at UTS, Professor Glenn Wightwick: “I’m confident with a consistent and long-term approach to investment in technology, innovation, education, and in research, Sydney as Australia’s largest ecosystem can climb the ladder".
Also worth noting, the report included Sydney in the Global top 10 for Connectedness, and in the Global Top 15 for Fintech.
Funding of Sydney’s of ecosystem
Globally the report still assesses Sydney as a Major Hub Startup Ecosystem due to its historically high performance.
In its key findings of funding, the report bundles Sydney in a cluster of cities including Stockholm, Bangalore and Berlin that have:
"...relatively low levels of Funding Quality, driven by lack of local, experienced VCs compared to other ecosystems."
The report defines Funding Quality as “a combination of the number of local investors, investors’ experience (average years of experience and exits ratio), and investors’ activity (percentage of active investors in past 12 months, and the number of new investors).”
It goes on to say that among top global ecosystems, the places most hindered in the rankings by a gap in early-stage funding are Vancouver, Sydney, and Hong Kong.
Alex McCauley: “We have had some large capital raises by venture funds in Australia that are yet to be deployed into the ecosystem, so there’s a lot of dry powder ready to go. Across the country, startup precincts like the Sydney Startup Hub or The Precinct in Brisbane have been built and populated over the last couple of years, and they’ll be producing results for their local ecosystems and the country for years to come. Alongside strong organic growth, we would expect these positive fundamentals to start to deliver performance boosts in the medium term”.
Professor Glenn Wightwick: “In Sydney, we do see investment and important elements to support the tech sector and startup ecosystem taking shape. Though we have to bear in mind these elements do take time to build momentum. For example our support of the NSW Government’s Sydney Innovation and Technology Precinct will ensure that startups have a home in Sydney to flourish for a long time to come”.
Talent to power Sydney’s ecosystem
One highlight of the report for Sydney was the ecosystem’s high ranking in Access to Talent - “the percentage of engineers and growth employees with at least 2 years of startup experience at the time of hiring”. As well as Quality of Talent which is based on “the number the number and density of top developers on GitHub, English proficiency, and historical exits - a proxy for experienced scaled teams in the ecosystem”.
Professor Glenn Wightwick: “UTS is proud to see Sydney’s high ranking for talent by Startup Genome, particularly in an ever-competitive global arena. We champion the approach of startup ecosystems working side by side with universities. Our innovative UTS Startups program is growing the next generation of startup founders and providing Sydney’s ecosystem with the talent to solve global problems at scale. Sydney needs a pipeline of the best talent, ideas and research from across the entire education system and we champion the approach of startup ecosystems working side by side with universities”.
The full 2019 Startup Genome Global Startup Ecosystem Report is available from May 9, and a Deep Dive summary of Sydney’s startup ecosystem is also available.
You can also follow discussion on Twitter via the hashtag #GSER2019.