The Sydney Startup Hub above Wynyard Station in the heart of the CBD will be relocated to an undetermined site somewhere across the six square kilometres around Central Station known as Tech Central by the NSW government in October next year.
In a rare announcement involving tech and startups from NSW innovation, science and technology minister Anoulack Chanthivong, he promised a new Tech Central Strategy on how “Tech Central can empower the innovation ecosystem, as well as play a greater role in supporting housing, creative industries, and the visitor and 24-hour economies”.
The wording suggests the strategy will focus more on the government’s other priorities, rather than startup sector, which has now been waiting for action since Labor took charge in March 2023.
It’s now 15 months since the minister announced plans for an Innovation Blueprint for the state, leaving the startup sector in a holding pattern in 2024, awaiting its release following consultations earlier this year. The government says the Blueprint will be released in the first half of 2025, a year-and-a-half after it was first announced.
Given the pace of that policy development, it’s unlikely the new Tech Central Strategy will be in place by the time the Sydney Startup Hub is forced to move out of York Street.
NSW innovation, science and trade minister Anoulack Chanthivong
Investment NSW will lead the development of the strategy in collaboration with the Department of Planning, Housing and Infrastructure, and Transport for NSW.
The move will break the lease on the Sydney Startup Hub (SSH) three years early. The heritage-listed, Art Deco, 12-storey building was built in the 1930s as Railway House. It’s now privately owned.
The NSW state budget in September 2023 gutted rental support for the SSH by two-thirds, $4 million, to just $2 million, although at the time that figure was not revealed. On top of that, Investment NSW shed around a quarter of its workforce and startup-related support. Labor sought to blame the former Coalition government for the cuts.
This year’s budget allocated $4 million in FY25 amid little news for the sector when it’s compared to Victoria’s $40m for its startup agency, LaunchVic.
The SSH is home to Stone & Chalk, Tank Stream Labs, Fishburners, Microsoft Reactor and Antler, among others, and has been home to nearly 2000 startups since it was launched by the former Coalition government in 2018.
While the former government supported it through Covid as the SSH teetered on the brink during lockdowns, the new Labor government cut its funding just six months after coming to power in 2023, along with killing off plans for the $10 million Carla Zampatti VC fund to back female founders.
Chanthivong also suspended the Minimum Viable Product (MVP) grant for six months in 2023 while NSW Treasury conducted an expenditure review. When the program returned, it was reduced to $50,000.
This year, both the NSW and federal governments failed to support the annual Startup Muster survey of the local tech ecosystem, released this week, leaving founder Murray Hurps to draw solely on private sector support for the first time.
Coincidentally, the Startup Muster report cited Stone & Chalk (1), Fishburners (2) and the Sydney Startup Hub (5) among the most-used coworking spaces.
On top of that, nearly half of the respondents (46%) said they were considering moving from their current location.
Source: Startup Muster 2024
The report also revealed that startup workers are returning to the office, with a small decline in home office (67%) contrasted with a 6% increase in coworking space use to 38% in the wake of the pandemic, with the 2018 report recording home at 55% and coworking at 52%.
The $5.8 million Tech Central rental rebate scheme introduced by the Coalition wound up in late 2023 with companies such as Airwallex and Espresso Displays receiving millions in support over three years to locate themselves in Tech Central.
The shadow minister for innovation, science and technology Mark Coure said it looks like the government’s plan is to not have a plan.
“In September Minister Chanthivong promised ‘long-term policy, stability and clarity’, but this announcement demonstrates once again there is no cohesive plan and no meaningful support for startups and founders. It remains unclear if the long-awaited Innovation Blueprint will address these problems,” he said.
“By displacing Australia’s two most used co-working spaces, Stone & Chalk and Fishburners, according the recently released Startup Muster Report, without any support for a transition move and blindsiding the startup ecosystem, Labor is again forcing founders to look elsewhere for headquarters.”
His colleague, Jacqui Munro, the shadow assistant minister for innovation, said the data already revealed the NSW tech sector is slipping on the minister’s watch.
“This government is happy to speak with Atlassian, but fails to include Fishburners. It perfectly sums up Labor’s approach to the startup sector. Over 20 months this attitude has put at risk the incredible pipeline of early stage ventures that NSW, under the Coalition, has historically supported,” she said.
“This year there has been a 26% drop in the number of new companies founded in NSW compared to 2022, when the NSW Coalition was last in Government. This is coupled with a $2 billion drop in per year VC investment. Early stage companies and small business are being cast aside in favour of big tech, fundamentally limiting growth opportunities for our state.”
Blueprint still coming
The government says the Innovation Blueprint – “to be released in the coming months” will “explore a new accommodation model at the Tech Central Scaleup Hub, including refreshed services and support for businesses across the ecosystem at all stages of growth”.
The government previously pledged to release it in 2024.
Minister Chanthivong’s announcement said the government “is committed to the success of Tech Central and seeing it flourish as a melting pot for groundbreaking innovation, research, and lifestyle”.
The Tech Central precinct is bordered by Haymarket, Camperdown, and South Eveleigh, 1.5km from Sydney’s CBD, and includes Surry Hills, were multiple VC firms and tech companies such as Canva, Afterpay and Safety Culture were based before the concept coalesced under the former Coalition government.
Atlassian is currently building 40-storey eco-skyscraper next to the train station.
The Coalition went on the to build the Tech Central Scaleup Hub at 477 Pitt Street, run by Stone & Chalk, and the Quantum Terminal above Central Station, launched in 2021.
Now, after nearly two years in office and half-way through its first term, the Labor government is turning its mind to what to do there. The role of executive director has remained unfilled during Labor’s entire term after Annie Parker departed in March 2023.
Chanthivong says “a fresh vision” for Tech Central will establish the district as a leading place to live and work, as a future driver of NSW government’s key priorities, including housing, healthcare, the night-time visitor economies, and transport infrastructure.
“Tech Central hosts the largest tech innovation ecosystem in the country. We are proud of Tech Central being Sydney’s heart of innovation, but there is potential for it to be much more,” he said.
“Specialist support within Investment NSW will scale existing work in investment attraction, brand promotion, and community building to improve the district’s economic potential.
“We’re also giving NSW startups the best chance to flourish by transitioning the Sydney Startup Hub to the heart of Tech Central.”
The government argues that the relocation of the Sydney Startup Hub “will ensure founders, entrepreneurs, investors, corporates, and the entire innovation ecosystem, can collaborate with universities and research institutes that are right on their doorstep” adding that it’s “engaging closely with key stakeholders” at the SSSH “to facilitate a smooth transition and service continuity, including the international landing pad”.
Investment NSW will continue to be charged with attracting investment and talent to Tech Central, as well as facilitating better coordination between startups, research institutes, and universities, the government said.
>Atlassian CEO Mike Cannon-Brookes was enlisted to be part of the government announcement, saying the plan “helps breathe life into Tech Central, because a precinct without people is just buildings, it’s not a community. For Tech Central to thrive, it needs to be a vibrant part of the city and support work, home and life.”
Interstate rivals
The NSW government’s “definitely thinking about possibly doing something, some time soon, hopefully” approach stands in stark contrast to rival states, which have been investing heavily in support for the startup ecosystem.
Last week the Western Australian government announced $45 million in funding to leverage investment by VC firms in local startups. The Victorian government poured another $40 million into its startup agency, LaunchVic, which in turn, has been investing in startups, including female founders through its $10 million Alice Anderson sidecar fund, pre-accelerator programs and VC funds, including a $300,000 incentive for VCs to set up shop in the state.
Queensland has also been busy, even backing NSW startups to cross the border and set up there, as well as supporting women to break into VC and providing funding for NSW VCs to open their doors in the Sunshine State.
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