A new report into Victoria’s startup sector reveals that any politician wanting to promise voters jobs should be looking to back startups.
The Startup Employment in Victoria report bydealroom.co, in collaboration with LaunchVic, found a 10.75% increase in startup jobs year-on-year between 2018 and 2020. Around 5,900 direct new local jobs were created by local startups over that period
And while the pandemic hit Victoria’s startup employment growth, which declined to 8.1% in 2020 from 13.4% in 2019, it was still more than double the ABS’s 3.1% pre-Covid estimate for the Victorian economy as a whole.
Startups under five years old generated the highest number of new jobs (39%) over that period, employing 2,300 people. More mature startups – five to 10 years old – contributed a further 2,100 roles (35%), with companies more than a decade old creating 1,500 new jobs (26%).
An analysis of the date also revealed that as startups grow and become scale-ups, job growth accelerates. The 115 scale-ups identified in Victoria have created 2,700 jobs since 2018, with 23% emerging in the past two years.
The report focused exclusively on startup creation by Victorian startups and included homegrown startups founded in or after 2000, so long as the company is currently active and maintains its main presence in Victoria.
It did not count the jobs created by foreign startups based in Victoria or Australian startups with their main office outside of the state.
Dealroom.co CEO and founder Yoram Wijngaarde said Victoria has one of the fastest growing emerging startup ecosystems.
“This report confirms that startups have become a leading source of job growth and are more resilient to external shocks,” he said.
“Meanwhile, the global economy is transitioning to digital, making a strong entrepreneurial and innovative economy so vital.”
LaunchVic CEO Dr Kate Cornick said the report demonstrated how integral small and scaling startups were to new job creation.
“Based on current growth rates, dealroom.co has projected that by 2025 Victoria will have 3,000 active startups that employ twice as many people as the sector did in 2018 – which could be 51,400 people,” she said.
“This exponential growth is something startups are renown for and this report confirms this growth is happening at a local level, which is incredibly exciting.”
The Dealroom.co report also reveals the changing nature of employment in the state, as well as its key sector strengths.
Around half of the new jobs were created by healthtech, fintech and enterprise software startups. Healthtech companies added new jobs 55% faster than the already-over performing healthcare sector, which has nearly 10% growth.
Meanwhile fintech and energy startups also outpaced jobs growth in their respective sectors, which currently have growth rates at twice the level of the state average.
Sara Zabukovec, chief of staff at A Cloud Guru, the Victorian startup which began life in 2015 and recently sold to Pluralsight for $2 billion in one of Australia’s biggest M&A tech deals, said anyone looking for a job in the tech sector should consider startups as career accelerators.
“Three years ago, the Melbourne startup job market was dominated by established players like SEEK, REA Group and MYOB – competing with these companies and attracting talent to other startups was challenging,” she said.
“But now, there are a lot of smaller players on the scene who have created tonnes of opportunities for job seekers who want to experience the many rewards of working in and building a fast-growth company.”
Zabukovec said startups act as career accelerators because the learning curve significantly outpaces how people experience it with traditional industries and employers.
“There are often multiple, complex problems that need to be solved all at once, without the luxury of well-resourced teams, which enables employees to both deepen and widen their skills and capabilities,” she said.
And when it comes to investment, the Startup Employment in Victoria report outlines how Victorian startups with seed funding scaled four times faster than those that didn’t, while series A+ funded startups scaled six times faster.
Dr Cornick said: “A future where startups represent a major part of the new jobs being created and value to the economy is a lot closer than we think.”
LaunchVic’s recently established Jobs Board – a dedicated search engine for startups – also shows that more than 500 jobs are currently available in Melbourne.
LaunchVic’s free, open source startup database firstname.lastname@example.org has tracked a total of 2,100 local startups, responsible for creating more than 40,000k jobs globally, and predominantly in Victoria.
You can download the Startup Employment in Victoria here.