Melbourne is one of Australia’s top startup ecosystems.
A new report out by Startup Genome has shone a light on the city’s startup sector to reveal a number of interesting findings, and how it compares to other major cities popular with startups around the world.
Melbourne’s startup ecosystem is in the “Late Activation” phase, according to the report, meaning it is creating scores of accelerators, co-working spaces, and other startup support organisations. But it is quickly growing toward the “Globalisation of the Ecosystem”, which will mean the sector will need to sustain the current momentum and to help startups go global and attract more resources to the ecosystem.
If this is achieved, the report estimates that the size of Melbourne’s startup ecosystem, currently valued at US$1.6 billion ($AU2.14 billion), will at least double in value over the next few years.
“Reaching the average ecosystem value of the globalisation phase will quadruple that (current value), adding billions of dollars in economic value to the region,” the report says.
“At minimum if Melbourne reaches the global median for ecosystem value, the region could create an additional $2.5 billion in economic value over the next few years.”
Other signals of Melbourne’s bright economic future include a large number of startups and rapid ecosystem growth, startup output is roughly twice the average of other Activation phase ecosystems, and the region’s growth in startup output has well-outpaced the global median.
Areas the startup ecosystem struggles with include early-stage funding. One interviewee in the report even called it “an acute capital gap”.
“According to our data, over the last few years, Melbourne has had a lower level of available early-stage capital than every other comparison ecosystem in this report,” the report said.
“By our calculations, this adds up to an annual early-stage funding gap of roughly $US66 million ($AU88.4 million) per year in Melbourne. Likewise, median funding round sizes in Melbourne tend to be smaller: while seed rounds are roughly at the global median in terms of size, Series A rounds are about half the size of the global median.”
Also, a lower proportion of startups in Melbourne get seed funding than in other ecosystems.
“We need to see capital being spread out into the ecosystem,” said one person.
One-fifth of startups that receive seed funding in Melbourne go on to obtain a Series A round of funding. While higher than Sydney, this is considerably lower than places such as Stockholm, Boston, Barcelona, and Tel Aviv.
Here’s a look at some other insights from the report, in 11 charts.
Startup Genome’s “Melbourne Startup Ecosystem Report” was commissioned by LaunchVic.
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