Australia’s technology start-up sector has gone from scant activity to an explosion of interest, people and capital in less than a decade, and by some measures Australia has one of the fastest growing start-up sectors globally.
Investment in start-ups is growing faster than in Europe or the US; we have seen more than 60 per cent growth from 2016 to last year alone.
Universities are investing millions in entrepreneurial programs such as accelerators and start-up hubs.
But is this activity actually making a difference and adding valuable start-ups?
Things were very different just five years ago. Australia’s few venture capitalists raised $155 million to invest in new technology companies — one of the lowest rates among the members of the OECD.
There were roughly four start-up accelerator programs nationally, and Australian universities offered little by way of meaningful entrepreneur support beyond the odd entrepreneurship subject.
Around that time I founded Incubate, the student union-backed start-up accelerator at the University of Sydney.
We held our first demo day pitch night in March 2013 and only two or three venture capital investors attended. Back then, almost no one invested in student-founded companies.
Staff at multiple universities told me “Students don’t care about entrepreneurship, why bother with student programs?” or “Don’t waste your time, people in Australia are not interested in start-ups”.
Our country struggled to understand why entrepreneurship was important and why we should care.
Fast forward five years and the Australian tech landscape has completely changed.
Local venture capitalists have raised more than $1.5 billion in the past two years alone. There are more than 25 accelerators and more than 70 university-affiliated start-up entrepreneurship programs.
Incubate’s most recent demo day last month saw more than 20 venture capitalists and investors attend, representing more than $1bn in funds under management.
The reality is that universities that don’t have “start-up strategy” are losing out. And students are paying attention.
The University of Technology Sydney found that almost 40 per cent of students already have their own business or want to create a start-up.
Citi Foundation recently showed even higher start-up intent globally, with 44 per cent of young people across 45 cities trying to start their own business.
For the first time new students pitch their start-up ideas before the university semester has even started.
I’ve started to hear student start-ups compare themselves with other established technology companies from Australia: “We’re the Canva for video” or “We’re the Freelancer for marketing jobs” or “We’re the Atlassian for design teams”.
Universities have an important role to play in the innovation ecosystem and their investment in on-campus initiatives should continue.
Five of Australia’s 10 most active accelerators are university-affiliated. These programs are helping to seed Australia’s start-up sector by supporting entrepreneurs at a very early stage (usually idea to minimum viable product or initial customers).
Universities are investing heavily in entrepreneurship and commercialisation activities — more than $85m has poured into new, university-affiliated start-up programs and facilities in the past five years, according to Galileo Ventures research — the new seed fund I’ve co-founded focused on supporting graduate entrepreneurs.
Initiatives are coming from the bottom up, such as student initiatives like Textbook Ventures, or the top down from senior executives. UTS, Monash and the University of NSW, for example, now all have deputy vice-chancellors of entrepreneurship and enterprise.
Universities advertise jobs such as start-up program manager or director of entrepreneurship. These jobs did not exist five years ago.
Several universities have launched new programs while others have expanded their program size or added new industry verticals to focus on. Notable new programs include: RMIT Activator’s $7m program to support entrepreneurship across its campuses including a new seed fund and city hub; UNSW Founder 10X, along with other initiatives, is another example of a newly launched pre-seed accelerator with $20,000 equity-free grants; New Ventures Institute at Flinders University was recently awarded best new incubator in Asia-Pacific; and iAccelerate at the University of Wollongong. All are examples of multi-million-dollar programs with new facilities and wider community focus.
No one can argue that the surge in money, activity and entrepreneurs aren’t good signs but many will point out the relatively large number of new players in the space. “They’re inexperienced” or “they don’t have good mentors” are common critiques.
Many of these programs are new and have problems of their own, including: working out their funding mode; determining optimal program structure; securing follow-on seed funding for companies; and recruiting experienced mentors. But as the ecosystem matures and programs graduate more start-ups, the whole sector will benefit.
Universities, with their vast seas of enthusiastic students, are helping seed Australia’s start-up boom. The more universities invest in strengthening programs now, the more Australia — and the world — will benefit from the compounding benefits that will eventuate.