Increasing Growth in Melbourne’s Startup Ecosystem

Our latest regional report looks at how an ecosystem dependent on large traditional industries carves out space for the impressive multiplier effect of startups.

Startup Genome
May 7, 2018 · 4 min read

At least $2.5 billion in economic value could be created if Melbourne can continue on its current trajectory and attain the median size of all ecosystems in our analysis.

This is one of the key findings in our latest regional report examining the state of the startup ecosystem in Melbourne, Australia. Together with our partner, LaunchVic, we find massive potential for growth and proactive, ecosystem-building policy interventions.

This potential comes from four places in particular.

Source: Startup Genome

First, the ecosystem is growing rapidly. The chart alongside shows that Melbourne’s Startup Output is nearly twice as high as the average for other Activation phase ecosystems. Growth in Startup Output has been among the highest in the world, as has the growth rate for early-stage funding.

Source: Melbourne Startup Photo Library

The region has seen a spike in the number of organizations that constitute the support system. Just in the last several years there has been a sixfold increase in accelerators and 900% growth in coworking spaces: there are now around 170 just in Victoria. As a result, there is one accelerator for every 41 tech startups in the region, and 15 coworking spaces for every 100 tech startups.

Source: Melbourne Startup Photo Library

Second, there is considerable scope for startup and scaleup success in Health, Biotech, and Life Sciences. These areas, which are mature compared to other sub-sectors, are enjoying good growth rates in early-stage deals worldwide. Victoria boasts world-class universities and research institutes, as well as dedicated public and private efforts to turn research into commercial innovation. The national and state governments are pumping millions of dollars into new funds to help support startups in these areas.

Third, for an ecosystem in the Late Activation phase (approaching the Globalization phase), Melbourne has a good level of Global Connectedness. As prior Startup Genome research has found, Global Connectedness is associated with Global Market Reach, which boosts startup growth. One dimension of this is the extent to which Melbourne attracts entrepreneurs from other parts of the world (see chart). This Global Resource Attraction and Global Connectedness provide a solid foundation for future growth.

Source: Startup Genome

In at least anecdotal corroboration of this finding, nearly every person we interviewed for the report could claim some sort of global connection. They usually had lived or worked abroad (including in one of the top global ecosystems). This is one way in which Global Connectedness gets built.

Fourth, for an ecosystem of its size and stage, Melbourne boasts a deepening pool of Startup Experience. In a survey conducted by Startup Victoria last year, half of the founders in Melbourne said they had previously started a company. Of those, one-third had founded a company that was eventually acquired. Compared to Globalization phase ecosystems, high percentages of founders and software engineers in Melbourne have previously worked in startups. This kind of Startup Experience becomes a common resource for the entire ecosystem, facilitating learning over time.

With more growth, comes more gaps.

  • First, Melbourne startups appear to need higher levels of early-stage funding, despite a rapid rise in recent years. This is borne out by our data as well as feedback from interviewees: there is an “acute capital gap at the earliest stage,” said one. In addition to funding levels, several interviewees spoke of the need for greater capability and know-how among regional investors.
  • Second, Melbourne needs to increase its Global Market Reach, building on the existing level of Global Connectedness. Like Sydney and New Zealand, Melbourne startups sell outside the region, but mostly to the United States. Expanding startups’ access to Asian markets, in particular, is a key opportunity.
Source: Startup Genome
  • Lastly, Melbourne startups report lower levels of ambition and global know-how than other ecosystems (see chart), and than will be necessary for further startup growth. This, along with Global Connectedness, is important for achieving further growth.

One thing is clear, both from the data and from the people: Melbourne’s appetite and aptitude for growth and innovation cannot, and should not, be quelled.


The Melbourne Report will be launched with LaunchVic during Melbourne Knowledge Week, a celebration of technology and ideas, from May 7–13,2018.


Want to work with Startup Genome to orient your city’s ecosystem for growth? Please get in touch. Email: marc@startupgenome.com

Startup Genome

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We accelerate the economic growth of startup ecosystems worldwide through benchmarking, networking & exposure.

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