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Victoria is often referred to as Australia’s ‘startup state’, with Melbourne as its beating heart. A 2018 report by LaunchVic, Victoria’s leading startup ecosystem development agency, surveyed 2,771 Victorian startups to reveal some valuable insights and if you are after how startup business works, this report is for you. The number of survey respondents was in itself a positive indicator, with only 1,600 startups being surveyed in the previous year.

In fact, the report found that since 2010, Victoria’s startup ecosystem has been growing at a steady rate of 23% per annum. This is in stark contrast to national figures, with the annual Startup Muster report revealing that 12.5% fewer startups were active in 2018 than in 2017 - the first drop in the number of early-stage startups in Australia for the first time in five years. The report also finds that the largest startup sector in the state is health, accounting for 13% of startups, followed by media and entertainment (11%), enterprise (10%) and commerce (10%).

Victoria: Australia’s Startup State

Victoria is Australias startup state

These stats go to show that despite the lower density of startups and scaleups compared to cities like Sydney, Singapore and Berlin, Victoria’s ecosystem still has significant momentum. Some local startup successes of particular note include Envato, Culture Amp, Lord of the Fries, CarSales, VinoMofo and Red Bubble, demonstrating the state’s thriving culture of innovation. So what makes Victoria a fantastic state for startups, and what further room for improvement is there? Continue reading if you want to know how startup business in Victoria is currently doing.

Accelerators, Incubators and Coworking Spaces Make Startup Business Happen

Opportunities provided by accelerators, incubators and coworking spaces are of great importance when it comes to running your startup business smoothly. What sets Victoria apart as a robust startup ecosystem is its 29 accelerator programs, 150 coworking spaces and numerous incubators, and the opportunities these initiatives provide.

Accelerators and incubators are intensive programs that entrepreneurs can participate in to fast-track the development of their ideas. Some notable programs in Victoria include the Melbourne Accelerator Program (MAP), Excellerator/Incubator, Slingshot, The Difference Incubator (TDi) and TRaM (Translating Research at Melbourne).

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While some are industry-specific, others are open to startups of all descriptions. Gaining admission into one of these accelerators or incubators is no easy feat, given how competitive they are and the rigorous application processes they involve. Once you make it in, however, you’ll be able to benefit from mentoring, networking and funding opportunities, following in the footsteps of successful, local startups. Melbourne also boasts some incredible coworking spaces which function has collaborative hubs for startups. These include Inspire9, One Roof Women, WeWork, Engine House, Hub Australia and TwoSpace.

Some further resources for budding entrepreneurs include Startup Melbourne, TedxMelbourne for tech, education and design inspiration, and Hackathon Queen, an online resource with a list of all of Melbourne’s hackathons.

The presence of incubators, accelerators and incubators, as well as government investments from Invest Victoria, makes the Victorian ecosystem one with incredible potential.

Room For Greater Funding and Diversity

As a relatively young ecosystem, Victoria’s startup scene has great potential for increased diversity and funding. LaunchVic’s chief executive Kate Cornick says that the youth of Victoria’s startup system allows for the chance to “create a different form of ecosystem, free from the ‘bro culture’ found in some more traditional startup hubs.”

At present, 28% of Victorian startup founders are women, with certain sectors like design, social enterprise and education having an almost equal gender split. On the other hand, financial services and data analytics are 90% male-led, while 100% of energy startup founders are male. 33% of founders were born outside Australia, with another 55% having at least one parent born outside of Australia. A further 2% of Victorian founders are of Aboriginal or Torres Strait Islander descent, greater than the state’s indigenous population of 0.7%.

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While there is room for greater diversity in certain sectors, Victoria still punches above its weight in many ways. This diversity in and of itself will add to Victoria’s culture of innovation and entrepreneurship, with diverse perspectives and contributions allowing for even greater ideas to be formed.

The availability of funding also needs to be considered as Victoria’s startup ecosystem continues to grow. According to LaunchVic, an impressive $1.73 billion has been invested across 766 deals in the past five years. However, it has been taking longer and longer for startups to obtain angel investment, which should be one of the fastest ways of getting funding.

According to the report, startups looking for angel investment have between 15-20 conversations with potential investors, taking an average of 5.4 months to secure an investment. By comparison, those raising venture capital have around 20 conversations and raise funds in about 5.6 months, while those raising through private equity take just 10-15 conversations and a little over five months to obtain funding.

This highlights that there is a missing link in the funding landscape which is holding back early-stage startups. While Victoria is home to some of Australia's best angel investors, LaunchVic’s report reveals that the number of angel investors and angel networks is substantially below global benchmarks. As the ecosystem continues to grow rapidly, the investor market also has to keep pace in order to position Victoria as a global player in entrepreneurship and innovation.

Accelerate Your Startup With the Right Team, Tools and Services

ITBOOST Team at Startup Victoria October 2019

To complement your participation in any accelerators, incubators or coworking spaces as well as any funding you may have received, startups also need tailored tech support including professional keywords research for an effective Search Engine Optimisation practice so their websites receive reasonable amount of online traffic.

At IT BOOST Australia, we provide apps, websites and SEO services to startups at “startup prices”, allowing you to take your business to the next level on your own terms. Our services include competitor analysis, SEO strategy and SEO issue fix-ups, web app development, website design and mobile app development.

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