Getting high-risk capital away from mining and into tech is part of Victoria's plan for a better startup ecosystem

All the ingredients are there. They just need to be mixed together the right way according to Cornick. Photo: iStock.

MELBOURNE — Victoria has a buzzing startup ecosystem.

It has produced more unicorns than any other state in Australia, such RealEstate.com.au, Seek, and CarSales.com.au.

It has attracted international hot shots like Zendesk, Slack, Square, Stripe and GoPro.

But there is still room to improve.

Speaking at PauseFest 2017, Dr Kate Cornick, the CEO of VicLaunch, a government program launched to accelerate startups in Victoria, outlined a number of ways her organisation is working toward solutions to address the gaps in the industry.

“At the moment we are going through a process, to ask what can we do to address the market failures within the startup ecosystem,” she said, “…because we can’t invest in all of you, we got to do things that are really going to change this sector.”

She says Victoria has the potential to be a “truly be an extraordinary ecosystem”.

“We’ve got all the right ingredients, we just have to mix it together the right way,” she says.

“What can we do to ensure our best and brightest choose to stay… and grow global companies right here, and what can we do to attract the world’s best entrepreneurs to come here.”

Having consulted stakeholders, educations, accelerators and many others who are involved in the startup scene, these are the areas that LaunchVic has identified as priorities.

Research

“It is really astounding to me, as someone who is passionate about the research sector… how broadly this is recognised as a problem in our ecosystem,” said Cornick, who has a background in electrical engineering.

“We need to do something to help address this issue.”

In the 1990s, “you didn’t go to [Silicon] Valley unless you had deep expertise in micro processes, computer science and the like,” she said.

But the difference now is that the internet has dropped those high barriers of innovation.

As a result companies like Facebook, been able to grow from a dorm room in Harvard, says Cornick.

“It doesn’t take away from the enormity of what these people have achieved… but I think as time goes on these ideas are going to be harder to come across,” she says.

“A lot of the low hanging fruit is being taken. So we have to go back into what our deep expertise is.

“What are we going to do to make sure that we are not just innovating in the here and now, when the barriers to innovate are quite low… But ask where are we going to be in 10 years when those barriers are much higher.”

Scaling

According to Cornick people need to think about long-term scaling as how they can take their company from 10 to 100 employees, as opposed how they can take their idea and turn it into a product.

While she said a goal to create a company of 10 people is a starting point for many entrepreneurs, “taking it from 10 to 100 is even harder” and it is that type of thinking that will benefit the startup ecosystem.

“One thing that has really struck me is we… forget our ecosystem is far more than technology, creatives, entrepreneurs and founders.

“It’s the operational people, the finance people, the marketing people,” she says.

“As we talk to scaling companies what we hear is that they are struggling to hire the right people.”

She says there is a shortage of “middle ground” people who aren’t the “scrappy” founders, and people who aren’t gentrified.

“We should be reaching out to educations institutions to get the best and the brightest,” she suggests.

“We need to say to [people looking for a corporate career] you are part of our ecosystem and you have a very important place.”

Investors

“We hear lots of people calling out for the need for more money… but we need to support our community to invest wisely,” she says.

“We have an awful lot of high risk capital in this country, and it’s just being directed to the mining sector.

“We need to see how we can move that money from the mining sector to technology.

“And we need stronger angel communities that allow our investments.”

She says the best advice she has received on this topic was: “the most important thing you can do in starting a startup is getting the right investor on board.

“We have money in this country but we need to invest it wisely,” she says.

“We also need a healthy corporate system… our growth depends on corporates being prepared to take a risk… on the products we are going to create.”

From her own experience a startup founder with a number of international offices, she says, “Australia is the hardest market to sell into.”

She said the problem lies with the middle managers who risk the most by taking on a startup, and would be impacted the most if it failed.

“So we have to encourage our corporates to be more entrepreneurial,” adding that the ecosystem should be positioning startups to corporates as a way to cut costs and be agile.

Celebration

“Our ecosystem is booming, but our parts aren’t always connected,” Cornick says.

“I’ve been really stunned by the number of people who can’t name startups from Melbourne.

“Sure we can name… the unicorns, but what about the Culture Amp’s, the Envato’s, the Redbubbles.

“These are companies that are absolutely gunning it, and should be role models for our sector.

“We have to celebrate what we are doing. We have to tell people our story.”

Diversity

“I don’t think we have paid enough attention to how we help people through the ecosystem,” says Cornick.

“Let’s make our system be known as the most diverse ecosystem in the world… And that means each and every one of you have got a role in the people you hire… the people you recommend, the stories you tell. Make sure diversity is part of your processes every single day.”

Last month LaunchVic announced a $4.9 million investment into the state’s startup sector as part of its second round of funding.

As part of the round seven startups received up to $1 million in funding.

*The author travelled to Melbourne as a guest of Pause Fest 2017.

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