When it comes to start-up success, Aussie tech wizards are increasingly making their mark both at home and abroad as they chase their dreams ‘over the rainbow’. And just like in the song, many are finding that, with the right support, “the dreams that you dare to dream really do come true”.
Of course, Dorothy’s trek along the yellow brick road has many parallels with the start-up journey, not least of which is the importance of banding together with other like-minded souls in pursuit of your dreams.
If you’re a start-up, or aspire to be, it’s a great time to be in Australia as our start-up eco-system continues to evolve to meet the needs of a growing and diverse start-up community.
The rise of co-working spaces, incubators, and accelerator programs designed to support the transition from nascent idea through to a successful business is being enhanced by increased focus and funding, from both government and private sector entities.
To clarify, incubators are mostly co-working facilities that seek to provide affordable and supportive environments in which founders can launch and grow an early stage start-up, while accelerators offer short-term (typically 2-6 months) programs aimed at delivering rapid growth and scale. There are no rules for what different environments provide, and facilities vary significantly depending on who is involved, the linkages to tertiary and research institutions, funding access, and so on.
The announcement last month of a $35 million investment from the NSW Government to create an 11-storey start-up hub in central Sydney will bring together key players including Stone & Chalk, Fishburners, Tankstream Labs and The Studio, providing facilities and resources for thousands of start-ups.
This followed the announcement of $1.4 million in federal grants for four innovation incubators in Brisbane, Sydney, Newcastle and Adelaide under the Federal Government’s $23 million Incubator Support Initiative. The Victorian Government is also developing the Goodshed at Docklands with partners Data 61.
The American example
I was recently in San Francisco and took the opportunity with senior ACS colleagues to investigate the different options available to support start-ups in the US. We visited the Austrade Landing Pad along with several other leading incubator and accelerator facilities including Rocketspace, Founderspace, Parisoma, Alchemist Accelerator and Impact Hub. We also saw ‘BeSpoke’ a Westfield-operated incubator that targets retail-focused start-ups and offers co-working, demo and event spaces converging retail and technology.
Some co-working spaces are little more than shared real estate with concierge services and regular events to encourage collaboration between different tenants, while others offer a high level of engagement, tailored support and structured programs to move start-ups through defined growth stages.
A sign of growing maturity in the Australian market is greater involvement by corporations in helping to fund incubators or even in some cases establishing their own. Citibank Australia operates a fintech accelerator program while Telstra launched its Gurrowa Innovation Lab in Melbourne two years ago with a strong focus on mobile technology.
ACS Vice-President Yohan Ramasundara is currently on a three-month secondment to Austrade in San Francisco through his employer’s talent management program. Ramasundara is actively engaged with the innovation and start-up communities and the Australian Landing Pad, while contributing to and learning about Silicon Valley’s start-up eco-system.
He said the biggest differences he’s noticed between Australia and Silicon Valley are the lack of venture capital funding available in Australia, (an issue also tabled publicly last week by Blackbird Ventures partner, Rick Baker) and our risk-averse culture.
“Silicon Valley culture encourages fast failure – while it’s not preferred, they see having a failure under your belt and recovering from it as a positive learning opportunity. The risk appetite is much greater over here and that leads to a more open approach to sharing information and talking freely about business ideas. An idea without execution is not worth much at all. Stakeholders in the eco-system collaborate while competing,” he said.
“With so many people in a concentrated space all working on start-ups and collaborations, and the easy access to researchers, mentors and investors, there’s lots of cross-pollination happening here that Australia really hasn’t been able to replicate yet.”
Ramasundara welcomed the recent announcements of start-up hubs in Sydney and Melbourne as steps in the right direction, saying it’s critical to create an environment where founders can readily access a range of professional services and support along with acceleration programs, R&D expertise, investors, mentors, potential partners and collaborators.
One of the key ingredients for a successful start-up eco-system is the ready access to experienced entrepreneurs and professionals to mentor local start-ups through the challenges of seeking funding and scaling their business.
A highlight of my recent visit to San Francisco was speaking with Kevin Jones, who co-founded the Impact Hub for start-ups that want to make a positive change in the world. With eight start-ups under his belt, seven of them successful, Jones has a wealth of experience to offer conscious entrepreneurs operating out of the Impact Hub in San Francisco’s Mission community.
Co-working spaces, incubators and accelerators and corporate-funded programs can be good options for some start-ups, however founders should do their research before making a commitment. Some companies are using their incubators to gain early access to technologies that will give them a competitive differentiator with large equity stakes in high potential start-ups.
A critical next step in the development of Australia’s start-up eco-system will be a clear process to measure the effectiveness of different options and programs to help identify which approaches are delivering the best outcomes to maximise success.
Our future competitiveness in the global economy depends on it.