Sydney’s startup ecosystem is worth $24 billion, Melbourne’s $10.5bn

- September 23, 2021 4 MIN READ
Sydney from the air
Sydney. Photo: AdobeStock
The startup ecosystems in Australia’s two largest cities, Sydney and Melbourne, are worth a combined A$34.5 billion according to the latest edition of the Global Startup Ecosystem Report (GSER) 2021 by Startup Genome.

Sydney was ranked 24th in the world, behind San Diego (21), Berlin (22) and Bangalore (23), and ahead of Hangzhou (25), Atlanta (26) and Vancouver (29).

The good news for the Emerald City is that it’s halted a three-year slide in the annual rankings, rising 3 places from 27 in 2020 (23 in 2019). Melbourne is equal 36th – the same as 2020 – alongside Geneva/Bern, Delhi and Dublin in the GSER rankings.

Silicon Valley maintained its top slot, but the big improver in the last 12 months is London, now ranked equal second alongside New York City, up from 4th in 2020. Beijing dropped from 3 to 4. Next on the top 10 list are: Boston, Los Angeles, Tel Aviv, Shanghai, Toyko and Seattle.

North America continues to dominate the Global Rankings, with 50% of the Top 30 ecosystems coming from this region, followed by Asia with 27% and Europe with 17% of the top performing ecosystems globally.

The global startup economy is worth over US$3.8 trillion in ecosystem value.


Sydney bounces back

The Startup Genome report says the Sydney ecosystem is now worth US$17.4 billion (A$24bn) and Melbourne’s US$7.6bn (A$10.5bn).

Melbourne’s ecosystem rose in value by A$3 billion rapid rise in the value in Victoria’s capital is revealed in the annual report, growing from $2.21bn 2018, up 475% in just four years.

The startup ecosystem rankings look at five key criteria in each city: Performance, funding, connectedness, market reach, talent and knowledge.

With Silicon Valley topping the list with straight 10s in all categories, Sydney’s scores were: performance 4, funding 4, connectedness 8, market reach 5, talent 4, knowledge 1.

Melbourne’s scores were: performance 1, funding 1, connectedness 4, market reach 2, talent 2, knowledge 1.

Sydney’s early-stage funding sat at US$922 million in FY21, more than double the global average of US$431m.

The median seed round was US$525,000 (global av. US$494,000). The median series A$4 million (global av. A$2.7m).

Atlassian, and local unicorns Canva and Zip singled out as part of a Sydney’s “dynamic, educated workforce” in the GSER.

“What truly sets Sydney apart is its tight-knit tech community centered around a handful of innovation centers and accelerators. The Sydney Startup Hub opened in 2017 and generated more than $280 million in investment and over 1000 jobs in its first 2 years in operation,” the report said.

“Since December 2020 Sydney Quantum Academy has been working to build on that strength by supporting established companies, startups like Q-CTRL, and government-backed enterprises like Silicon Quantum Computing.”

Sydney topped the Oceania region, follow by Melbourne and New Zealand, which together, account for 90% of the region’s ecosystem value, worth US$30 billion (A$41.5bn).

Sydney and Melbourne, are in the top 25 ecosystems globally for Connectedness and Talent.

The report says early-stage funding in Oceania between 2018 and 2020 totaled over US$2 billion, a 35% increase from the previous two-and-a-half-year period.

The Startup Genome report singles out fintech and digital & creative industries as Sydney’s sub-sector strengths, with Australia ranked equal first in the world for technological readiness, for fintech , with more than 60% of the nation’s fintech companies planting their HQ in the city.

Athena Home Loans and Zip are cited as local success stories.

Canva gets the shout out on the creative front, with NSW as home to 39% of the nation’s creative businesses, 42% of creative industry jobs, and 70% of the industry exports.

Melbourne’s grows

Melbourne also is fintech powerhouse, led by Afterpay, Airwallex, Judo Bank, Pexa and MYOB – worth a combined A$30bn – with Life Sciences as its other subsector strength.

The GSER says Melbourne’s maturing startup scene is home to more than 2,100 startups, nearly 500 investors, and close to 50 accelerators including, with startup job growth hitting 10.75% between 2018 and 2020, translating to more than 5,900 jobs created.

Total VC investments in Melbourne surged to more than US$1 billion in 2019-2020, with the state government’s LaunchVic recognised for its efforts to support

LaunchVic CEO Dr Kate Cornick said the Startup Genome report demonstrated the strength and ongoing economic opportunities for the state.

“The steady rise of tech companies amid the course of a global pandemic has reinforced the resilience of startups in Victoria and the growing maturity of the sector. We continue to go from strength to strength, and in the past year we had some of the largest exits and acquisitions on record including Square’s commitment to acquire Afterpay for a record $39 billion,” she said.

Dr Cornick said Melbourne had a record number of exits between $50 million and $1 billion on par with Sydney, Amsterdam and Stockholm.

Total early-stage funding in Victoria increased from A$363m to $529m (35%) in a year.

“LaunchVic has been focused on addressing the early-stage funding gap and we’ve already seen promising results in the space of a year, with our new angel investor networks pumping millions into Victorian startups. I expect early-stage investment funding will be even more impressive next year when the Victorian Startup Capital Fund and Alice Anderson Fund really start to get underway,” Dr Cornick said.

The city was also identified for its strengths in Life Sciences – attracting approximately AUD $511 million in Life Sciences funding each year, or 40% of the national total.

The GSER is the world’s most comprehensive and widely-read research on startups with 280 entrepreneurial innovation ecosystems and 3 million startups analysed.

You can download the Global Startup Ecosystem Report 2021 by Startup Genome here.