In 2021 we worked towards putting Australia’s startups, tech companies and innovation organisations on a geographic map. We stopped in November 2021 and wanted to share what we learned along the way.

1. There are about 100,000 startups (or things that look a bit like startups) in Australia.

Depending on how you look at it. So don’t quote us on that.

There are two reasons it’s difficult to answer this question with confidence.

2. Definition and categorisation is difficult

Even something as simple as “what defines a startup” versus an entrepreneurial small business, or versus a scale-up, is challenging. (We’ve also seen the term “grown-up” used beyond “scale-up”.) 

Startup Status uses a taxonomy developed by the founder during a PhD, which gave our map a bit of imposter syndrome.

Startup Muster (co-founded by a statistician — more ‘map imposter syndrome’) had the same question about the definition of a founder. On the definition of a startup, Startup Muster said:

Are you an early stage business? Do you have a large addressable market? Are you using technology to capture that market quickly?

​​So how does Startup Muster define a startup, InnovationAus.com asked. “They are companies in the first stage of their growth with a large addressable market, who are using technology to attempt to capture that market quickly,” says Ms Wullf.

She agrees that not every new business is a startup by this definition – many are simply new businesses. It is the use of technology which sets startups apart.

3. Getting accurate and complete data is difficult

Really difficult. 

Because it’s hard to define a startup, it’s hard to know which data to collect.

If you’re crowdsourcing the data then you have to motivate people to add themselves to the database.

If you’re gathering data from public sources then you’re limited by what’s there and whether their definition matches your definition. 

This table illustrates the differences in databases of Australian startups:

In 2018 Techboard estimated there were over 5,000 startups in Australia, based on their definition and scope. That’s quite different to the 100k estimate we heard in our interviews.

A comprehensive, validated source of data would be a huge step in the right direction for understanding Australia’s startup ecosystem.

4. Accuracy and completeness of data is critical to be of use

Research from the 180 Degrees Consulting team into the value proposition of a geographic ecosystem map for different stakeholders found that relevant, up-to-date information was critical. 

Which is unfortunate, really, because it’s difficult to get.

The StartupAus Crossroads report identified a problem with fragmented ecosystem data.

Data on startups is an area where Australia is sorely lacking. … Unless this paucity of data is rectified we cannot reasonably hope to make good decisions about how to bolster the sector and won’t fully understand its impact or the opportunities a thriving domestic technology sector presents.

The report noted:

The Department of Industry is undertaking its own startup data project as of Q3 2019. A working group has been engaged to map what organisations fall under the umbrella of the term ‘startup’ and what sorts of data points are valuable for stakeholders across departments and industry. StartupAUS has been involved in that initial consultation and will continue to be involved across Q1 2020 as the project moves into determining the funding and methodology required to establish a comprehensive data- gathering effort.

We understand that this project is still in progress. We are excited about the possibility of a more complete data set for the Australian startup ecosystem, with location-based filtering and insights available.

5. The importance of physical location and proximity

From the 180DC whitepaper:

  • According to the NSW Innovation and Productivity Council (NSW Innovation Precincts: Lessons from International Experience) innovation precincts create more patents, processes, products and internationally traded intellectual property (IP). Additionally, startup density is another important factor in creating successful startup ecosystems as it gives growing startups everything they need to succeed, bringing founders together with business accelerators, mentors and investors. High startup density also leads to more frequent ‘collisions’, (StartupAus Crossroads report, 2020), which enable startups to rapidly share learnings, collaborate and build highly effective networks.
  • Spatial proximity facilitates more regular interaction whereas non-spatial dimensions harness greater trust and understanding which enables more effective and efficient learning (le Duc & Lindeque, 2017). 
  • Carbonara (2020) found that geographical proximity between startups and investors in a creative ecosystem encourages greater contributions due to reduced information asymmetries. 
  • The benefits of clustering (“geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalities and complementarities” –Porter, 2000) include effective support, resource gathering, and accelerated business leveraging (Balestrin, et. al. 2017)

"Clusters are defined to be spatially concentrated areas of economic activity"

We’re excited to see the outcomes of the clusters emerging in Adelaide’s Technology Park, Sydney’s Tech Central, and the wildly ambitious Startmate City. We’re grateful to the team from 180 Degrees Consulting for going deep into the evidence around physical proximity and connections.

Slide: Is there evidence of geographical benefit in NSW? Case study from Me3D.

And, obviously, we’re advocates for the benefits of co-location, connection and clustering of the startup ecosystem in northern Sydney. Get involved now.

We’re happy to share our insights from this project to help others learn from our experience. You can see our project documentation, links and research on the Ecosystem Map project page. And please contact us if you want to learn more.