A new report on the state of Victoria’s startup ecosystem, based on the largest survey to date, of 1,137 Victorian startups, has been released. Some of the key highlights from the report’s findings include:
- Startups in Victoria are executing monetisation strategies very early in their journey: 60% are revenue positive in their first year, and almost 80% by year two.
- Victoria has a strong track record when it comes to transforming startups into high growth firms. Three ‘unicorns’ (worth $1bn) have emerged from Victoria – more than any other state in Australia. 26% of Victoria’s startups are experiencing a stage of high growth (defined as firms that have grown employees, revenue or customer-base by an average of more than 20% per year for the past three years).
- While there is no reliance on one particular sector, startups and scaleups in the health industry are creating a disproportionately large number of jobs in Victoria.
- As with other markets of a similar size, such as Scandinavia, many startups are thinking globally from day one. More than two thirds of startups in Victoria are exporting to key international markets including the US and UK, as well as China and New Zealand.
- There is significant community engagement within the startup ecosystem in Victoria. As well as the presence of 20 One quarter of founders are working with mentors and advisors who have had experience working at startups valued at greater than $100 million (notable given that the proportion of people with this experience is only 8%).
The ‘Mapping Victoria’s Startup Ecosystem 2017 Report’ (delivered by LaunchVic in partnership with Startup Victoria), provides detailed insights into the current state of play in Victoria’s startup landscape. This details both individual firms within the startup community and the wider ecosystem that supports growth.
Many reports are a long and cumbersome to get through, but thankfully there’s plenty of easy to consume infographics to help even the time-poor, casual observer understand this information, some more reports should do.
Victoria is leading the way when it comes to turning startups into high value, high growth companies.
Victoria has a strong track record of transforming startups into high growth firms. Already, three ‘unicorns’ have emerged, each valued at more than $1 billion – more than any other state in Australia. Those 3 unicorns are REA Group ($8.7bn) in digital advertising, SEEK ($5.9bn) in the recruitment space, and Carsales.com.au ($2.8bn).
When you think about the largest problems in the world that Startups go after, you may imagine traditional industries being the ones disrupted, but the list of firms by sector surfaces some surprising results. While Health-focus startups account for 11% of all startups in Victoria, they account disproportionately for employment in the sector, with a massive 26%, followed by some margin by the Media and entertainment sector at just 11%.
We often think about the products and services we use as consumers and we fall in love with startups that disrupt and improve our lives. Despite that, many startups actually participate in the Business-to-business space, with 38% of customers for startups being business customers and just 28% focused on consumers. Government accounted for the 2nd largest customer base with 28%. Given some startups cross multiple spaces, participants could select multiple options for customer types.
One third of all VIC startups are bootstrapped, including firms in growth and later stages of development. There’s substantial competition between Melbourne and Sydney for the best place to raise funding and those that raise funding in VIC are doing pretty well. Despite America still being considered as the easiest location for startups to raise large early-stage funding, the tides are changing as Australia grows up in this space.
Well-functioning capital markets are important to growing the pipeline of successful high-growth firms in Victoria. Being able to gain access to the right capital at the right time enables firms to grow, innovate, export and create jobs.
Victorian firms report that the average timeframe for raising external capital is 5 months. The median amount Victorian firms raise from Angel investors is $250,000 and $1.5 million from Venture Capital.
Australians are well represented on the international stage in science, technology and health innovation. That’s born out in the stats with Two-thirds of VIC startups selling products and services into international markets. This goes to Australia’s 24 million problem, some of our ideas are far larger than our population can sustain, which means extending companies from state-based, past national, to global companies. Victorian startup and scaleup firms are targeting primarily the US and UK as their largest target markets, followed by China and New Zealand.
When it comes to the breakdown of personnel working in startups, they still skew majority male, but things are changing. There’s currently 75.4% male and 24.5% female. The average age of founders in Victoria is 36, perhaps a little older than the normal dreamy-eyed 20 something.
CEO of LaunchVic, Dr Kate Cornick said,
“We have never before had such a large sample size of Victorian startups, making the report an important asset for the sector. It is a useful tool for key decision makers in terms of better understanding the makeup of the Victorian startup ecosystem and how best to support it.”
CEO of Startup Victoria, Georgia Beattie added,
“We are trying to make the Victorian ecosystem easy to navigate. Startups will know exactly where to find capital, meetups and accelerators and on the other hand, corporates will be able to easily find start-ups for collaboration opportunities.
This annual startup map will be an important playbook for the Victorian startup community. Whether you’re an aspirational entrepreneur looking to make the jump or a founder looking to raise your series A – this is designed to make that next step a little easier.”
Victorian Minister for Small Business, Innovation and Trade, Philip Dalidakis said,
“We already knew Victoria was the startup and innovation capital of Australia and this report confirms that. We’re working hard to ensure startups feel supported and welcome here in Victoria because we know they will support our future economy and create jobs for Victorians.”
You can read the full report here.