Sydney is by far the leading tech innovation ecosystem in the southern hemisphere, while global startup performance has fallen in a post-COVID correction, according to a new report.

Startup Genome’s The Global Startup Ecosystem Report 2025 outlines the current state of startup ecosystems around the world and ranks them in terms of performance, funding, AI-native transition, market reach, talent and experience and knowledge.

Sydney and Melbourne have maintained their spots in the global rankings, coming in at 25th and 32nd respectively.

The report placed Sydney as the top startup ecosystem in the Oceania region, playing home to more than 3,000 startups and a “formidable research and talent” sector.

Sydney has a total ecosystem value of $55 billion and boasts seven unicorn companies.

The report calculates ecosystem value as the sum of all exits and estimated startup valuations from 2022 to 2024.

In this timeframe, Sydney attracted $13 billion in venture capital funding and $1.3 billion in total early-stage funding.

The report found that Sydney’s key strengths are in climate-tech, medtech and life sciences, and quantum technologies.

Melbourne was the next highest ranked Australian city, placing at 32nd globally, with an ecosystem value of $18 billion, less than a third of Sydney’s value.

From 2022 to 2024, Melbourne startups landed $628 million in early-stage funding and $4.8 billion in venture capital funds.

“Melbourne’s startup ecosystem thrives on a dynamic blend of world-class talent, strong government support, a collaborative culture and access to global markets, making it a powerhouse for innovation and entrepreneurship,” the report said.

Brisbane was ranked in the top 40 emerging ecosystems in the world, with an ecosystem value of $4.7 billion and $2 billion in venture capital funding.

A post-COVID correction

The Startup Genome report found that global startup ecosystem value fell by 31 per cent in aggregate since the last edition.

According to the report, this is a correction to the huge uptick in valuations seen during the COVID-19 pandemic and is the result of a sharp decrease in exits and IPOs.

The numbers show there has been a disparity in the growth of ecosystems in different regions.

Asia and sub-Saharan African ecosystems only decreased by 17 per cent, while those in Latin America fell by 45 per cent in the same period.

The report also identified huge growth in AI and big data, with a 33 per cent increase in venture capital funding and the sector now accounting for 40 per cent of all global VC investment, up from 26 per cent four years earlier.

“This moment feels remarkably like 1994, two years after Netscape launched the Web era,” Startup Genome founder and CEO JF Gauthier said.

“Two years after the launch of ChatGPT, the third wave of exponential growth of startup ecosystems has started.

“We stand at the beginning of the AI era – one that will define the economic trajectory of nations for decades to come.”

Riding the AI wave

While ecosystems overall have declined, those that are embracing AI are pulling ahead, Gauthier said.

“The future belongs to nations and cities that combine bold visions with new AI-native startup policy action to hitch the AI wave,” he said.

Unsurprisingly, Silicon Valley was ranked as the top startup ecosystem in the world, with New York City, London, Tel Aviv, Boston and Beijing in a tie rounding out the top five.

Hong Kong enjoyed the most significant improvement in rankings, placing at 27th globally.

The results largely mirror the rankings produced in StartupBlink’s Global Startup Ecosystem Index Report 2025 from earlier this year.

This report placed Sydney as the 31st best city in the world for startups, and Melbourne at 42nd.

Overall, Australia slid down the rankings to 12th overall after growing by just under 25 per cent in the previous year.