Published on the 16/05/2019 | Written by Jonathan Cotton
Edutech, fintech and agtech setting A/NZ apart…
A new report offers a snapshot of the global startup environment and chronicles the changing fortunes of various tech hubs around the world.
The report – authored by San Francisco-based company The Startup Genome – offers a broad overview of the startup ecosystem worldwide, as well as highlighting the particular benefits of various startup hubs around the globe, including those in New Zealand and Australia.
First things first: What does the report say about the state of startup affairs from a global perspective?
“It’s a mixed bag downunder, with Australia seemingly slipping in its world startup rankings, and New Zealand still looking to shrug off its up-and-comer status.”
Firstly, ‘deep tech’– that is, IT based on IP – is increasingly where the money is.
“While the whole startup economy is growing, some parts are growing faster than others,” says the report. “One area growing particularly rapidly is deep tech – sub-sectors that require tangible IP to succeed, like life sciences, robotics and AI”.
Nearly half of all startups being created are in these deep tech-related sub-sectors, says the report, twice the share they made up in 2010-2011.
Secondly, the report proposes that issues around economic inequality often have a basis technological inequality. The report sites the statistic that 68 percent of all tech exit value is being captured by just 10 cities globally. (Things may be moving in a more equitable direction here however: In 2011/2012 that number was 87 percent).
Of course start ups are not to blame for any of this, argues the report. Rather, start ups offer a solution to such disenfranchisement.
“Entrepreneurs create jobs, wealth, and innovation – and are a global force for good,” assert the report’s authors. “As research from the Kauffman Foundation and others have extensively documented, most new jobs come from startups and scaleup”.
And for those still looking to make their home in that eternally forthcoming ‘next Silicon Valley’, it’s well and truly time to change your tune, says the report.
‘We think there will be no ‘next Silicon Valley’,” argue The Startup Genome. “Instead, there will be 30 ‘next’ hubs, distributed around the world, reaching critical mass driven by either regional (eg, Singapore in Southeast Asia) or sub-sector leadership (eg, San Diego in life sciences).”
“While none of them will be as big as Silicon Valley in the foreseeable future, each will thrive.”
So San Francisco isn’t necessarily the next innovation hot spot worth investing in. So where is? Somewhere south of the equator? Not so fast.
Turns out it’s a mixed bag downunder, with Australia seemingly slipping in its world startup rankings, and New Zealand still looking to shrug off its up-and-comer status.
The 2019 report sees Sydney drop six places in its world ranking, from 17th place in 2017 (the last time it was assessed by Startup Genome) to 23rd this year.
This is just one report of course, and it’s easy to find contradictory rankings – such as the Startup Ecosystem Ranking 2019 report from StartupBlink – and the paper still offers plenty to write home about regarding Sydney’s startup scene.
“Sydney’s success stories include Canva, a graphic design startup, which has become Australia’s latest tech unicorn after closing a funding round of US$40 million, valuing its operations at US$1 billion,” says the report. “Deputy, an employee management tool, raised US$81 million in the largest Series B in Australian history.”
The real potential for Sydney however is in the twin fields of edutech and fintech, of which Sydney breaks the world top 15. (Sydney’s financial industry alone accounts for nine percent of national GDP, larger than either Hong Kong or Singapore.)
There’s numbers to match too: Take Brighte, an interest-free home improvement platform that raised US$29 million in Series B venture funding in 2018; or Lendi, the home loan matching platform, that raised US$40 million in 2019.
Similarly, while Melbourne may have failed to crack the top 30, it still offers plenty of opportunity for entrepreneurs: Edutech is the fastest growing sub sector in Melbourne (10 percent of Melbourne-based startups are targeting the education sector) with the University of Melbourne ranked sixth globally as a leader in educational research.
It’s also an unusually diverse neighbourhood, with one-third of Melbourne’s founders being women, one in three founders having been born overseas, and two percent of founders coming from indigenous communities – who make up just a single percent of the local population. (Having Alibaba, Google and Amazon just down the street can’t hurt either.)
Across the pond, New Zealand is a top global leader in agtech and new food.
“Over 40 agtech startups – representing 20 percent of seed activity by deal value in NZ – have been founded since 2013. Robotics Plus, an agricultural automation company, raised US$8 million in 2018. BioLumic, a UV technology startup, raised US$5 million in 2018.”
And there’s more to the New Zealand story than the meat and wool industry. In addition to its vibrant agtech scene, The Startup Genome project finds New Zealand the best place in the world for “ease of doing business”, as well as boasting the shortest time to launch a startup and a world number one ranking corruption transparency.
Download the full Global Startup Ecosystem Report from Startup Genome