The average Series A startup has almost doubled in size since 2015, according to Crossroads Report 2020, an annual report on Australian economic records and trends.
“Along with being known for our sunshine, sporting prowess and lifestyle, Australia is increasingly becoming known for having fostered a generation of remarkable economic success,” said StartupAUS CEO and lead author, Alex McCauley.
Australia now has three ‘solitary unicorns’, or businesses valued at over US$1 billion.
Joining Canva are Airwallex, a Melbourne-based fintech startup and Judo Bank, a Sydney-based neo bank.
However, “these billion-dollar businesses are just the crest of the wave. A substantial swell of new tech firms is rising quickly behind them,” said McAuley, as companies such as Culture Amp, Envato, SafetyCulture and Airtasker are set to join them.
High-level development jobs typically remain where startups are founded, highlighting the value of creating technology businesses locally.
“Global trends make it clear that technology must play a fundamental role in driving our future of prosperity,” said McCauley.
Funding for these tech startups is a large-scale job creation driver.
Startups have created jobs across many different industries, with an estimation of 4,500 jobs being directly created by venture-backed startups in 2018.
Venture capital itself has seen strong growth in Australia in the last five years.
From 2015 to mid-2018, Australian venture capital firms raised more than $4 billion in new funds.
This rapid increase has been combined with a rise in the availability of other sources of growth funding for Australian startups, including debt, crowdfunding, and access to public markets.
Challenges for startups
Talent, research and development expenditure, as well as changing regulations concerning technology, continue to be key challenges in startup growth.
Australia has placed itself at the leading edge of technology policy, with a number of high-profile pieces of legislation aimed at curtailing the widespread power of technology platforms.
Although, there lies the risk that resulting policy outcomes may catch local businesses in the crossfire, causing significant disproportionate harm to Australian startups.
Access to talent is also a major challenge, as Atlassian co-founder, Scott Farquhar described it as the “single biggest barrier facing Australian startups.”
However, the Global Talent Initiative (GTI), a new government program allocating 5,000 permanent migration places per year to highly skilled tech experts, aims to support startup growth.
The program underscores a clear shift in mindset towards recruiting the world’s most skilful workers to help boost the Australian tech sector.
Australia also spends on average, significantly less expenditure on research and development compared to other Organisation for Economic Co-operation and Development (OECD) countries.
Government expenditure on research and development has also dropped, raising concerns for a lacking support of startups.
Success in overcoming these challenges towards startup growth could be the single biggest factor in whether Australia is able to maintain its economic success for the next generation.
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