CHART: Sydney has dropped to 16th in rankings of the world's best startup ecosystems

StartupGrind event at Campaign Monitor in Sydney this month.

Sydney’s startup ecosystem is slipping compared to the rest of the world, the latest Global Startup Ecosystem Ranking suggests.

It’s been three years since the last report was released and the groundswell for tech companies has exploded, but Australia is still a little fish in a growing pond.

Unsurprisingly, Silicon Valley maintained top spot for the best startup ecosystem for performance, funding, talent and startup experience.

Sydney was not so strong. The Harbour City fell four spots from 12th to 16th best in the world. While its ecosystem did grow in the past three years the pace was slower than elsewhere.

Already Australia’s tech scene is a long way behind the US. Melbourne fell out of the top 20 completely. And while Silicon Valley ranked top for performance, Sydney came in at 20. It was 16th for funding, 17th for market reach, 6th for talent, and 10 for startup experience.

That means is Australia has a bunch of talented employees, but the funding and market size is lacking. And when it comes to exit growth, Sydney is stagnant.

The report cited Melbourne’s proximity to Sydney as one reason why the city has fallen out of favour.

“Smaller ecosystems with close proximity to larger ecosystems often have a hard time continuing to grow due to new and existing talent and capital migrating to the larger nearby ecosystem,” the report says.

The good news is seed round funding levels in Sydney are up 33% in two years, possibly indicating there are plenty more startups coming down the funnel. One of the main reasons the US has built such a solid system is there have been a bunch of exits and founders compounding their experiences in new businesses as well as funding others. But that takes time. Fingers crossed for the next report.

Here’s the chart.

There’s more here.

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