The 2023 Startup Muster report reveals how central artificial intelligence (AI) and impact principles are important to founders and central to the Australian ecosystem.
The startup “census”, last released in 2018, saw more than 1100 people, including nearly 600 founders, answer a range of questions – delivering 165,000 responses – about the state of play and their thinking
AI is now being used by a majority of startup with 56% saying it’s used for key team functions, while greentech as the largest and fastest growing vertical for Australian startups, up from 5% in 2018 to 14% in 2023.
Among other trends to emerge from five years ago, the average founder age has increased from 41 in 2018 to 46 this year. And the number of founders aged 40 and over has increased dramatically while the number under 40 has declined. Those in the 40-549-year age bracket has increased from 29% five years ago, while those aged 30-39 fell from 36% to 23%. Founders 60+ rose from 4% in 2018 to 11% now.
Impact is now embedded in the DNA of the Australian ecosystem with 57% of startups saying they had some operations informed by impact measurement, with 29% regularly report on impact. Meanwhile, 28% said they had funding tied to impact measurement, alongside 42% donating employee time and 41% donating money to social impact.
Nearly two-thirds (62%) of founders were Australian by birth, followed by the UK (8%), and NZ and India (4%).
The good news is a decade-long increase in female founders, starting with 16% in 2014, rising to 24% in 2018, and now, 27%. Women are the top startup impact area at 19% – more on impact later.
There was a large jump in founders who said they had a job outside their startup, up from 34% in 2018 to 41% now, while 46% reported their startup was still operating compared to 42% five years ago.
Starting at home
While startup mythology has founders kicking off in the garage, there’s been a profound shift to home offices over the last five years at the expense of coworking spaces, with 68% using a home office (55% in 2018) as coworking spaces plunged from 52% to 32%.
That shift is emphasised in 67% of respondents saying they spent no days a week in an office outside their home company to 26% in 2018, alongside falls at every level in days in the week away outside home.
Fishburners and Stone & Chalk were the most popular coworking spaces with 31% of founders seeing themselves as part of an innovation precinct or cluster.
They also shifted to e-learning with 56% of startup supporting programming delivered mostly online – but 24% of founders said the quality of their home internet had a negative impact on their work.
In part this shift is a lingering tail from the pandemic, with 44% of startup founders said they had lasting impacts from Covid., with 10% citing hybrid/remote working as the top impact, followed by lower sales (5%), more sales (3%) and lost time (3%).
Importantly, 66% of founders said they had adequate mentorship, with UNSW Founders boss David Burt named the most recommended mentor.
But the top 10 mentors did not feature a woman. Climate Salad’s Mick Liubinskas offered some alternatives in the wake of the report, citing 15 women, including many in VC, as well as Cicada Innovations CEO Sally-Ann Williams.
Surprising and disappointing that they are all male.
A few from me:@RachelYang_ @pavina_adun @InnovationSarah @rneumann6826 @sallyannw @annie_parker Janet Brunckhurst, @morris_kate @lisa_fedorenko @holasammy @svnoles @aspectgood @AlezeiaB @AyalaDomani @chachiconnell https://t.co/v21LCUJU2H
— Mick Liubinskas (@liubinskas) October 31, 2023
Adelaide’s Southstart was the industry’s favourite tech event, followed by Blackbird’s Sunrise and Fintech Australia’s Intersekt.
Startup Muster’s Murray Hurps said Southstart is “the shining light that sets an example” for others to follow.
“They’ve not just lifted up the ecosystem of South Australia, but the ecosystem of the country as a whole, forming an incredible and valuable convening and inspiration opportunity,” he said.
Helping hands
When it comes to ecosystem supporters, they identified their top challenges as Financial viability (42%), program awareness (30%), scaling (20%) , talent availability (14%), and policy & regulation (8%).
The top requests supporters received but couldn’t help with were mostly financial: seed investment (18%), B-round investment or higher (16%), A-round investment (15%), other kinds of investment (12%), providing grants and scholarships (8%) and visa/immigration assistance (8%).
Founders who managed to land funding said they spent an average of 447 hours – that’s 56 working days, or nearly 3 months – speaking to around 72 investors to get their deal across the line.
The good news is that the amount of runway startup founders say they have is up from 8.6 months five years ago to 9.9 months now, however the number of startups who say they need funding to continue has risen from 65% in 2018 to 69% now while those trying to raise has gone from 49% to 55% in that time.
Founders who went looking for capital offshore said their top three reasons were: limited availability of local funding; more willingness to take risks; and better valuations and terms.
Nearly a third of respondents (30%) told Startup Muster that Startup Daily was a key source of industry news. Startup Daily was the 2nd most popular source of startup news, maintaining its position from 2018. The sector’s favourite book is The Lean Startup, while YouTube is the go-to place for online learning, rising from 48% of respondents in 2018 to 62% now.
Murray Hurps said: “One low point is the reduced interest in online learning (except for YouTube and ChatGPT) and news sources. I think any smart founder will be plugged into the market they’re operating in, and for me this sounds like an opportunity for the voracious learners and those on the Startup Daily newsletter to get ahead.”
You can download the 2023 Startup Muster report here.
The Spark Festival is on right now. Check out the program here.
Trending
Daily startup news and insights, delivered to your inbox.