Victoria has a $100 billion startup ecosystem

Victoria’s startup ecosystem has grown in value by $12 billion to surpass $100 billion according to a new report from LaunchVic.

The size and scope of their success is revealed in the Victoriaʼs startup ecosystem report 2023, produced in partnership with dealroom.co, which found the combined value rose from $91 billion to $103bn in the past year. The previous peak was $94.9bn in 2021.

The latest total valuation, based on Victoria’s 3,200-plus startups, scaleups and 19 unicorns, shows the ecosystem has grown in value 18X since 2016. 

Victoria’s five most valuable tech companies are REA Group ($20.7bn), Carsales.com.au ($11.5bn), Seek ($9.4bn), Airwallex ($8.5bn) and rising star Telix Pharmaceuticals ($2.9bn).

The top 5 employers are REA Group, SEEK, MYOB, Carsales and Judo Bank, creating 7,500 jobs.

After a couple of record years, VC investment in Victorian startups has returned to 2018 levels, with $668 billion of VC investment reported between January and November 2023. That level of funding is in line with the broader global downturn.

But it’s also well down on the previous four years – sitting at just over a a quarter of the 2021 ($2.4bn) and 2022 ($2.2bn) levels and less than half of 2019 ($1.3bn) and 2020 ($1.4bn).

Rounds between $15 million and $100m remained above pre-pandemic levels, although the state saw no $100m+ “mega rounds” in 2023 – the honours on that front went to Sydney-based Employment Hero hits, which banked $263 million in a Series F in October, with US-based Songtradr pocketing $106 million in a Series E. Victoria’s biggest raise for the 2023 was venue management startup Roller’s $78.6 million raise, led by US VC Insight Partners.

Victorian healthtech and biotech startups were the most funded sub-sectors in 2023, followed by fintech.

And 2023 also saw the total number of Victorian startups, founded in the last 20 years, to score VC backing surpass 1,300. 

But there are aspects where the second is underperforming against global benchmarks. A quarter have raised at least $5 million, which is slightly lower than the global average of 30% and only 15% of these funded startups have had an exit via strategic sale, buyout or IPO, compared to more than 30% globally.

While early-stage funding remains stubbornly below $100m investment a year, with little movement since 2016, the good news is that the unique number of investors is 50% higher than in 2019.

In 2023, there were 71 angel investments in 51 Victorian startups, worth a total of $23 million.

And the number of people working locally in startups has risen 12.6% since 2020 to 26,400 jobs. Victorian startups employ 56,000 people globally, with 35,600 (63%) based in Australia.

Fintech is responsible for creating the highest number of local jobs, with job creation driven by unicorns MYOB, Judo Bank and Pexa. Healthtech is the second largest job creator, driven by the large number of smaller startups and scaleups hiring new roles. 60% of Real Estate jobs are created by REA Group. Of those local jobs, 43% are in one of three sectors: healthtech, fintech and real estate.

LaunchVic CEO Dr Kate Cornick said that while 2023 was a tough year for investment, the Victorian startup ecosystem continued to grow.

“Early-stage investment continues to be a concern for LaunchVic, as it is essential startups get capital to support their early growth,” she said. 

“It is pleasing to see the work we have done to bring new investors into the startup sector pay off; however, we remain laser-focused on increasing access to early-stage capital.”

Download the report at launchvic.org.