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Dr.KiaraSimpson,United States,Researcher
Published Date:05-07-2017
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Executive summary Encouraging technology entrepreneurs to start and The City wants to increase the number of entrepreneurs grow global businesses will create more jobs, boost starting high-potential businesses. We want to increase Sydney’s economy, strengthen global connections opportunities for these businesses to access investment, and make the city a more desirable place to live, work talent and skilled support networks. We also aim to create a and visit. more connected ecosystem and reduce regulatory barriers. This action plan focuses on creating an ecosystem that Supporting Sydney’s technology startups enables knowledge-based, innovation-driven businesses to flourish. The City of Sydney supports a thriving business community that offers exceptional opportunities for technology It adopts a ‘lean startup’ approach, where the City entrepreneurs. regularly measures, evaluates and reviews programs that best support these businesses. The plan also includes We intend to work with industry and government partners to scope for us to amend our programs as needs and create an environment that enables these entrepreneurs to demands change. It is designed to address the needs of start and grow successful global businesses. individual tech startups as well as support organisations Sydney’s tech startup ecosystem is in the early stages that help them to launch and scale, such as accelerators of development and the needs of tech startups are very and incubators. different to those of small businesses. Entrepreneurs and tech startup companies need a local environment that provides support networks, business and entrepreneurship education, infrastructure and financing opportunities. Sydney2030/Green/Global/ConnectedTech Startups Action Plan “As the competition for investment and entrepreneurial talent reaches global proportions, municipal support for nascent entrepreneurial clusters becomes a must-have, especially for large metropolitan areas.” McKinsey & Company, Creating growth clusters: 1 What role for local government? Our five areas of focus The City’s proposed projects to support technology entrepreneurs include: Build a strong entrepreneurial culture and community. Encourage more people to – investigating the need for an entrepreneurship centre, 1 become technology entrepreneurs who start to provide a critical mass of office and event space for and develop high-growth companies. entrepreneurs in tech startups and the organisations that support them Create skilled and connected – creating an awareness campaign focused on Sydney’s entrepreneurs. Build a robust ecosystem entrepreneurs and the tech startup ecosystem 2 in which technology entrepreneurs have – creating a Sydney tech startup festival to celebrate the capacity and networks to launch local and promote the ecosystem companies that become global companies. – including digital technology education activities in the City’s programs, such as providing sessions on how Increase the startup ecosystem density. to code in our youth and library programs Ensure startups and the organisations that support them are able to scale, and can be – hosting ‘Startup 101’ business seminars to inform the 3 located close to one another so they can Sydney community about the tech startup ecosystem, connect, share ideas, mentor and partner how to found and grow startups, and enable them to with others. network with others – using our engagement and communication channels Support entrepreneurs’ access to to discuss and debate the impact of innovative funding. Generate more investors and more 4 technology, and to showcase tech startups investment in tech startups, and connect – implementing the City’s Knowledge Exchange entrepreneurs with investors and businesses. Sponsorship program to support education and Develop technology entrepreneurs’ networking activities coordinated by the entrepreneurial access to markets. Increase the number of ecosystem 5 consumers prior to and after the release of an – creating a visiting entrepreneur program to fast-track entrepreneur’s product or service. the business skills of technology entrepreneurs – collaborating with partners to develop business and entrepreneurship education and mentoring opportunities – assisting ‘angel’ investor associations or other members of the ecosystem to hold investor recruitment education events – leveraging our international sister-city relationships to strengthen knowledge and investment exchange. Sydney2030/Green/Global/ConnectedWithin this document, the organisation, the City of Sydney, is referred to as ‘the City’. The geographical area managed by the City is the local government area, and is referred to as ‘the city’ or ‘the local area’ DAWES POINT MILLERS POINT THE ROCKS BARANGAROO POTTS POINT SYDNEY PYRMONT WOOLLOOMOOLOO ELIZABETH BAY RUSHCUTTERS BAY ANNANDALE DARLINGHURST GLEBE ULTIMO HAYMARKET FOREST LODGE SURRY HILLS PADDINGTON CHIPPENDALE CAMPERDOWN CENTENNIAL PARK DARLINGTON REDFERN NEWTOWN EVELEIGH MOORE PARK WATERLOO ERSKINEVILLE ZETLAND ALEXANDRIA BEACONSFIELD ROSEBERY ST PETERS Sydney2030/Green/Global/ConnectedTech Startups Action Plan “During our lifetime, every industry and every business will evolve to become a technology- and data- Introduction driven business. The tech entrepreneurs who have left Australia, and their equally talented counterparts still in Australia, are the key to our future.” Dr Jana Matthews, ANZ Chair of Business 2 Growth, University of South Australia Sydney startups are competing in this global marketplace What are tech startups? without similar levels of support. Technology startups – or tech startups – are new The barriers to the growth of the Sydney tech startup businesses that are innovative; they generate new ideas, ecosystem include: the low number of entrepreneurs new products, new services and new ways of doing things. starting high-potential businesses; limited access to Business and product ideas are now driving innovation as investment, talent and a skilled support network; a much as technology ideas, so entrepreneurs don’t have to fragmented ecosystem; and stifling government regulation. be ‘in IT’ to start a technology-driven company. In fact, making the distinction between a ‘tech company’ Our economic development strategy and any other new company is difficult, as all businesses During 2007–08, the City undertook the most are increasingly built around technology. comprehensive community consultation in its history. We Those with successful business models have the ability spoke to residents, workers, students, business operators, to reach a global market rapidly, which results in swift industry associations, community organisations and economic and employment benefits locally. visitors about their vision, goals and aspirations for the future of the city. The result is Sustainable Sydney 2030 – This is why startups where technology is central to the a comprehensive plan for the development of the city to product or service being offered, particularly those that 2030 and beyond. The plan sets out a series of actions to utilise the internet, are transforming the way we work, live achieve a green, global and connected city, and identifies and play. synergies between various themes, such as the links In other words, entrepreneurs who found tech startups can between community, liveability, creativity, innovation and very quickly create high-growth, high impact businesses. productivity outcomes. International research shows that a focus on promoting The City’s Economic Development Strategy 2013 built on innovation and potentially high-growth companies creates and updated the broad economic themes in Sustainable employment opportunities and economic wealth. Sydney 2030. It provides an overarching framework that guides the City’s economic development initiatives, setting The global community of people founding, working in, out the City’s economic development aspirations, role, supporting and investing in tech startups refers to the priorities and approach. sector as an ecosystem. Various entities within the sector connect, link up, interact and help each other, strengthening The strategy is intended to be read alongside our action the ecosystem while increasing their own value. plans for priority sectors and places, one of which is this Tech Startups Action Plan. Governments across the world are establishing programs to support tech entrepreneurs in an effort to spur economic growth and job creation. Sydney2030/Green/Global/Connected“If you’re looking to start a company, start with the future. Imagine what things will be like in 10 years, not what they’re like now. The most important thing you can do is to solve a real problem. If you solve a problem that lots of people care about deeply, you’ll be able to figure out the rest.” 4 Melanie Perkins, Cofounder, Canva This Tech Startups Action Plan aims to do that by outlining About this action plan how the City can influence the success of entrepreneurs The City of Sydney’s Economic Development Strategy who are founding startup technology businesses, given recognises that supporting entrepreneurs is integral to our their potential for high growth and high impact on the City’s vision for the city’s economy. Entrepreneurs are agents of local economy and employment. change and we understand that supporting entrepreneurs This action plan responds to the findings of extensive as they become employers is an effective way to grow jobs research and consultation, as well as number of programs and job diversity in the economy. and pilot projects. In addition, the City of Sydney’s Cultural Policy and Action We compared Sydney’s tech-startup ecosystem with Plan acknowledges that creativity is a prerequisite of that of other global cities and identified the major trends innovation, not to mention critical to community wellbeing and issues. and economic strength and prosperity. The City of Sydney acknowledges: As part of the vision outlined in the policy and action plan, Sydney aspires to be a city that supports creative – the Silicon Beach – A Study of the Australian Startup experimentation and innovation, and makes space for trial Ecosystem report, produced by Startup Genome in and error. partnership with Deloitte Private, From Little Things and 5 Tech startups, by their very nature, embody one of the Pollenizer policy’s founding principles: the idea that initiative, – PwC’s Startup Economy report, commissioned by experimentation and enterprise are the bedrocks of 6 Google Australia developing a creative culture. The Cultural Policy and Action Plan also acknowledges that creative risk is a precondition – StartupAUS’s report Crossroads – An action plan to 7 of innovation and industry growth. develop a vibrant tech startup ecosystem in Australia The City acknowledges that businesses using technology – the South East Queensland 2014 Startup Ecosystem 8 innovatively have been described as the ‘new economy’, Report, produced by Boundlss and will continue to play a central role in Sydney remaining 9 – the Startup Muster survey, produced by Murray Hurps 3 green, global and connected over time. – the expertise and input of startup-ecosystem consulting In implementing the Economic Development Strategy, the 10 firm Spike Innovation. City will consider and respond to emerging trends and new business models. Sydney2030/Green/Global/ConnectedTech Startups Action Plan Tony Burrett, Sebastien Eckersley-Maslin, Alan Jones, bluechilli.com This Tech Startups Action Plan aims to do that by outlining Our consultation captured the views of entrepreneurs – and A dynamic plan how the City can influence the success of entrepreneurs those of the businesses, educational institutions, financial This action plan is intended to be dynamic, changing as the who are founding startup technology businesses, given organisations, incubators and accelerators, and co-working needs and priorities of the ecosystem change. their potential for high growth and high impact on the City’s spaces that interact with them to enable tech startups to be local economy and employment. founded and to scale. The City acknowledges the need to adopt a ‘lean startup’ approach so it can change, cancel or add programs as This action plan responds to the findings of extensive The City worked with a number of partners to implement quickly as possible. research and consultation, as well as number of programs pilot projects that helped clarify the issues facing and pilot projects. technology entrepreneurs; to test what role the City Many of the actions in this plan identify how the City will could play in addressing these; and to further develop act; however, each specific project will need to be scoped We compared Sydney’s tech-startup ecosystem with relationships with individuals and organisations within and implemented in partnership with other members of that of other global cities and identified the major trends the ecosystem to ensure this action plan is relevant the ecosystem. and issues. and appropriate. The City intends to report regularly on its progress with the The City of Sydney acknowledges: Pilot projects included educational, networking and identified projects. We will report on progress in achieving mentorship projects – for example, City of Sydney targets or identifying trends annually, although some data – the Silicon Beach – A Study of the Australian Startup Tech Startup 101 Seminar, the 66 Meet-Ups networking will not be refreshed this frequently. Ecosystem report, produced by Startup Genome in group, and Practical Business Learning for Entrepreneurs: partnership with Deloitte Private, From Little Things and We will assess priorities annually based on the outcomes 5 UTSHub Sydney. Pollenizer achieved and as new information on the needs of the sector We also support ongoing initiatives, including the CeBIT becomes available. – PwC’s Startup Economy report, commissioned by 6 business technology exhibition and conference, Startup Google Australia We will undertake a major review of the action plan after Week Sydney, Springboard Enterprises Australia, the five years. – StartupAUS’s report Crossroads – An action plan to REMIX Summit, the Global Coworking Unconference 7 develop a vibrant tech startup ecosystem in Australia Conference Australia, and the startup Good360, which received a City of Sydney grant. – the South East Queensland 2014 Startup Ecosystem 8 Report, produced by Boundlss This action plan has been peer reviewed by startup 9 ecosystem consulting firm Spike Innovation to ensure – the Startup Muster survey, produced by Murray Hurps the information is accurate and the proposed actions are – the expertise and input of startup-ecosystem consulting relevant and credible. 10 firm Spike Innovation. Sydney2030/Green/Global/ConnectedIn March 2014, StartupAUS produced Crossroads – An A partnership approach action plan to develop a vibrant tech startup ecosystem in In delivering this action plan, the City cannot act alone. Australia, which it updated in 2015. This report sets a clear We will seek to create strong partnerships and networks direction for a national startup ecosystem and identifies key with industry members, governments, community members policy areas that require government intervention. and other stakeholders so we can achieve more together. Wherever possible, the City will align its actions with the In fact, we will work out the details of many the actions NSW Government’s response to the industry taskforce and in this plan in collaboration with others in the ecosystem. other reports. We need to understand what is currently working We will also seek opportunities to engage with the NSW successfully in Sydney or elsewhere, and amplify or Government to collaborate or jointly deliver new programs. replicate those programs and initiatives rather than detailing new projects without industry input. The City acknowledges that the Sydney ecosystem is bigger than the companies and organisations located within its local area and a collaborative approach is essential. The City will support entrepreneurs, government bodies, StartupAUS and other organisations in developing this crucial part of Sydney’s innovative economy. At the end of 2012, the NSW Government Response to the Digital Economy Industry Action Plan, outlined a vision “for NSW to be recognised globally for leading innovation and driving productivity gains in all areas of the economy, enabled by strong, vibrant and connected ICT, creative 11 industries and education sectors”. In early 2016 the NSW State Government sought community feedback on the directions for a NSW Innovation Strategy which is expected to be released in late 2016. Sydney2030/Green/Global/ConnectedTech Startups Action Plan “To grow rapidly, you need to make something you can sell to a big market. That’s the difference between Google and What is a a barber shop. A barber shop doesn’t scale.” 13 tech startup? Paul Graham, programmer, writer and investor The distinction between a tech startup and other Defining tech startups companies is an important one. The city is home to many StartupAUS defines a tech startup as an emerging high- businesses selling products and services online. They growth company that uses technology and innovation to are all important to the diversity of the city’s economy and 12 tackle a large and often global market. many create local jobs. However, for the purposes of this action plan, we will follow the StartupAUS definition and not StartupAUS identifies two important characteristics: consider businesses as tech startups unless they have a 1. The potential for high growth. While not all startups focus on high-growth and disruptive innovation. need to raise capital to grow, StartupAUS advocates an ‘investablity test’ as a proxy for high-growth potential, in which the ability of companies to raise capital from professional, arm’s-length investors is a good indicator of their growth potential. 2. Disruptive innovation. Startups are reshaping entire industries by displacing established competitors through their use of technology and business model innovation. Sydney2030/Green/Global/ConnectedA tech startup case study This is an article written by Tasnuva Bindi, Editor, Startup Daily, ‘Image editing startup Pixc soaring in sales, averaging 1000 a week’, 14 January 2014 14 www.startupdaily.com.au “Everyone has smartphones with cameras these days, Image editing startup Pixc soaring in sales, so I thought to myself, ‘wouldn’t it be cool if they could averaging 1000 a week just take a snapshot of their product using their phone, From paintings to photo prints, we’ve been upload it onto the cloud, and have it edited for them so heavily influenced by images for centuries. Today, they can display it online?” in the eCommerce space, an image can be the Cardew didn’t rest on her idea. She was quick to build a difference between making and not making a sale. Minimum Viable Product (MVP) on WordPress – that is, a Unfortunately for the uninitiated, this may require simple site with email contact details, calling on people using sophisticated Image Editing Software such to email product photos they want edited. It was not as Photoshop – a skill that takes time to master. long after, that Cardew received an order of almost 700 Now with Pixc, a product image can be edited and images by a single buyer. returned within 24 hours for 2. Now, people can simply upload photos through the Founded last year by 26-year-old entrepreneur, Holly ‘Submit Your Photos’ section of the website and have Cardew, Pixc is a new online photo editing service the edited image returned to their email within 24 hours built expressly for eCommerce businesses. Cardew – for 2 per image. The experts in the startup will remove knew all too well the difference an image can make to crowded backgrounds to achieve a simple contrast with a product’s sellability, having previously run a regional the product. online marketplace. Pixc is averaging 500 to 1,000 sales per week. Cardew She says, “When I was building a regional online says sales depend on seasons. Over Christmas, people marketplace, I realised the problem wasn’t necessarily weren’t sending as many images because they were too that people needed help with selling online. They just busy selling. It was the months before Christmas that needed better product images.” they would send orders when they received new stock. “You can’t touch a product when you’re shopping online, Since launching, Pixc has processed thousands of so an image is the first point of contact. Research product images. shows that an image of a product on a contrasting The images are being outsourced to an international background can increase sales by 39%; and a large team of photo editors. Cardew says that much like image can increase sales by 9%. So images are really Gengo (human-powered editing) and Flightfox (human important. People look at images before they read the powered flight search), Pixc is human-powered product description.” image editing. Given there are over 25 million individuals and Their primary marketing methods include word-of-mouth, businesses selling online, with 2 million products being cold calling, and social media – all cost-effective options. uploaded daily on eBay alone, Cardew realised the potential for a business. Sydney2030/Green/Global/ConnectedTech Startups Action Plan “Everyone has smartphones with cameras these days, so I thought to myself, ‘wouldn’t it be cool if they could just take a snapshot of their product using their phone, upload it onto the cloud, and have it edited for them so they can display it online?” Holly Cardew, Founder, Pixc Holly Cardew, pixc.com “We don’t have a huge marketing budget. And I found Although the business has been entirely bootstrapped that social media works quite well. All our customers are (personal finances) to date, Cardew is open to raising eCommerce business owners who are active on social investment capital in the future so she can grow out media to drive their own business,” says Cardew. her team. But she says she would prefer to test all her assumptions first, before taking that leap. The two biggest challenges Cardew has faced throughout this venture has been scaling and dealing Cardew is also looking to take part in an accelerator with negative feedback, though the latter never put programme with her co-founder, and is currently her down. shortlisted to muru-D. “Although I never took it to heart, there were people Pixc won the Telstra Digital Scholarship in 2013 at who said my idea wouldn’t work. I know the exact Melbourne, and the duo will be heading over to San problem I am solving, so I chose to ignore sceptics. Francisco in March. Cardew thinks this will pave a I think someone else in my position, would have been favourable path towards developing partnerships in discouraged by that,” says Cardew. Australia and overseas. “At the end of the day, perseverance and self-teaching www.pixc.com is most important. Although there’s a great startup Postscript: Holly Cardew was selected to be part of community in Australia, you don’t know what interests the 2014 international Blackbox Connect program run people have. You will get lots of opinions thrown at you, by Google for Entrepreneurs and Blackbox in Silicon but you have to make up your own mind about what’s Valley as well as one of 28 startups selected into the 500 best for your business.” Startups 2015 accelerator program in the US. Holly is Cardew’s biggest advice to aspiring startup founders is now based in both San Francisco and Sydney. to start with an MVP – a term she learned from the book, The Lean Startup. “Build something that you can do manually via email or through a WordPress site. This way you can determine whether there is a market for your product. This is better than building a full-scale product, and then trying to go out and sell it, because you can manipulate the business to suit the market,” says Cardew. “I was originally going to create a mobile app, but then I realised that half my customers don’t take pictures with their phones. They use proper cameras.” Sydney2030/Green/Global/ConnectedMelanie Perkins, Cliff Obrecht, Cameron Adams, Cofounders, canva.com This is an article written by: Fran Foo, The Australian, ‘Grand designs on ipad as Canva takes tablet plunge’, 16 October 2014 15 www.theaustralian.com.au Multi-language support is in the offing with Spanish likely Grand designs on iPad as Canva takes to be tackled first, said Canva chief operating officer and tablet plunge co-founder Cliff Obrecht. It’s a long way from being recognised as a verb but There are plans to support other mobile platforms like online design start-up Canva hopes to dominate Google’s Android in future, Ms Perkins said. the world one pixel at a time, with its sights firmly set on one day unseating US32 billion market Canva’s main weapon is ease of use: images are leader Adobe. selected then dragged onto a template to create professional-grade designs. Canva’s free drag-and-drop design tool will launch on the iPad following what it deems as a successful Top names in the venture capital and angel investment showing on non-mobile platforms. community have sunk in a total of 47m into Canva. They include Facebook investor Founders Fund, Paul Bassat’s People use it to create flyers, birthday and business Square Peg Capital, Matrix Partners, Twitter investor cards, Facebook covers, posters, info graphics and Bill Tai, Google Maps co-founder Lars Rasmussen and other designs, with premium images costing 1 each. Yahoo Chief Financial Officer Ken Goldman. Since opening its doors in mid-2013, Canva has Mr Tai and Mr Rasmussen addressed the media this garnered 870,000 users who have created 6.2 million week at Canva’s new premises, a few streets down designs, with 1.27 million done in the last month alone. from its previous base in the trendy Sydney suburb of Chief Executive and Co-founder Melanie Perkins Surry Hills. estimates a new design is created on the Canva platform The duo hailed Canva’s engineering smarts and said every two seconds. the company had the right ingredients to take on Canva’s largest following stems from the US, then giant Adobe. Australia, Britain, Canada, Spain, India and Brazil. Sydney2030/Green/Global/ConnectedTech Startups Action Plan This is an article written by: Shira Ovide, The Wall Street Journal ‘Campaign Monitor wins US250m venture capital funding from Insight’, 16 April 2014 16 www.wsj.com Campaign Monitor germinated out of a late-1990s Campaign Monitor wins US250m venture university business started by Ben Richardson and Dave capital funding from Insight Greiner, who grew up across the street from one another A 10-year-old Australian ‘start-up’ is joining the in the Sydney suburbs. The pair said they grew frustrated rarefied strata of buzzy young companies like Uber when they tried to use email marketing tools for their and Dropbox. company creating custom websites. Sydney-based Campaign Monitor, which makes software Richardson and Greiner spent their spare hours writing for email-marketing pitches, is raking in US250 million software to improve on those clunky tools. About a year (266.9 million) from venture-capital firm Insight Venture after they launched Campaign Monitor software in late Partners. It’s the first time Campaign Monitor has taken a 2004, it had three times the revenue of their web-design cent from investors, a rarity for a decade-old company. firm. The pair decided to focus on that business. The injection is among the biggest recent venture The founders declined to say how much revenue the rounds. Since the start of 2013, only a few companies, company generates, but said Campaign Monitor has including Dropbox, Airbnb and Uber, raised more money been profitable every month of its life. That has allowed from venture-capital firms, according to data provider them to self-fund the company. Dow Jones VentureSource and Wall Street Journal Richardson and Greiner said about six months ago they reporting. It’s also unusual for a single firm to make such began to weigh bringing in an investor for expertise and a large investment. to help the company expand. Campaign Monitor says its email templates are easy “We’re proud of the last 10 years. If we look at the next enough for non-tech-savvy employees to use, and it 10 years there are a whole lot of growth opportunities says its prices are flexible enough for companies that ahead for us,” Greiner said. blast thousands of emails, or for people who just send a couple of emails a year. The pair said they plan to use the fresh investment funds to expand their own marketing, and to hire more sales The company is among a growing roster catering to people to court new customers. Campaign Monitor an increasingly digital-obsessed marketing industry. also plans to open its first U.S. office. About 80% of the Now that spreadsheets are more common in company’s customers are in North America and Western marketing agencies than the “Mad Men”-era office bar, Europe, but roughly 40 of the company’s 65 employees technology firms are crafting software to help marketing are in Australia. departments manage digital pitches, keep tabs on social-media messages and analyse the impact of The company also plans to give its employees their spending. ownership stakes in the company for the first time, and may expand senior management. Marketing-technology companies have been a hit with investors, too. ExactTarget and Responsys were Parekh said the unusually large US250 million acquired in the last year in billion-dollar-plus takeovers. investment reflects Campaign Monitor’s maturity and Marketo, which went public in May 2013, reached a greater revenue than most young companies starting to market value of US1.8 billion before falling about 30% bring in outside investors. in the past two months. “Marketers are going to get more aggressive in their tech spend,” said Deven Parekh, a managing director at Insight, who also said email remains a core pillar of marketing campaigns. “When we look at the trends in marketing, Campaign Monitor certainly plays on those trends,” he said. Sydney2030/Green/Global/ConnectedWhy are tech startups important? Our innovative, global city Economy Sydney is recognised as Australia’s primary global city and Rapidly growing entrepreneurial companies are important the leading knowledge-based economy in the nation. More sources of innovation, increased productivity and than 100 billion is generated each year within the City of employment. They are also key drivers of economic and 17 Sydney local area, representing more than 7% of Australia’s social progress. economy and providing more than 437,000 jobs across all In the US, high-growth venture capital–backed companies skills levels and communities. account for 21% of gross domestic product (GDP), Despite the growth of business districts such as North US3.1 trillion in revenue, and 11% of private sector 18 Sydney, Parramatta and Olympic Park, and the growth employment, or 12 million jobs. corridor to the northwest, the City of Sydney local area Government policies that reinforce and develop accessible has maintained its pre-eminent role thanks to its large markets, human capital, and funding and finance will economic base, which includes a dense network of globally increase the likelihood of a vibrant ecosystem emerging competitive industries, well-developed infrastructure, 19 over time. good governance, and outstanding amenities and living International research demonstrates that a small number of environments. Keeping Sydney globally competitive is high-growth companies will contribute most to aggregate central to Sydney’s and Australia’s future. economic growth in a region, and that enabling these Entrepreneurs in tech startups create innovative solutions 20 companies to scale is imperative. to problems, harnessing the creativity and energy of Advances in technology are a fundamental driver of income people to build companies that ensure Sydney’s continued and welfare, and may well generate the most profound participation in the global economy. They are critical to changes to the economy in the City of Sydney local area building a city that is innovative, prosperous and lively. 21 over the next two decades. The impact of ‘unicorns’ – tech startups that achieve significant scale before an ‘exit’ (initial public offering (IPO) or acquisition) with a market capitalisation of 1 billion or more – is significant. The IPOs of Google, Facebook and Twitter together created close to 4,000 millionaires, many of whom will go on to start and invest in the next wave of startup companies and 22 mentor the next entrepreneurs. Startups that achieve this scale are rare but vital to the creation of a vibrant economy. Sydney2030/Green/Global/ConnectedTech Startups Action Plan “These startups are good and useful … They bring in a diverse set of people with diverse retail needs, supporting a wide variety of services … But more importantly, they’re good for the country … They hold the potential for the creation of good jobs and local firms that pay local taxes and nurture local talent.” Cory Doctorow, 23 UK Tech Startup Entrepreneur The Australian tech startup sector has the potential Employment to contribute 109 billion, or 4% of GDP, to the New firms add around 3 million new jobs to the US Australian economy and to generate 540,000 jobs by economy each year, while over an extended period 2033. Realising this potential will require a concerted “existing firms have been net job destroyers”, losing a total effort by entrepreneurs, educators, government and of 1 million jobs per year. In fact, the 4% of companies with 27 corporate Australia. the highest growth are responsible for creating more than 24 70% of all new jobs in the US. In the UK, the 6% of businesses with the highest growth rates generated half of the new jobs created by existing businesses between 2002 and 2008. These businesses were far more likely to be innovative, and research shows 25 that their innovation was a source of growth. With this in mind, international research recommends that economic policy should focus on promoting innovation and on nurturing the small number of companies with high- 26 growth potential. Sydney2030/Green/Global/Connected“If we don’t start investing in the new economy, 3.5 trillion is going to transfer out of our economy because of disruption Disrupt or and it will go overseas.” 28 Dr Michelle Deaker, Director, OneVentures be disrupted “In Australia, yesterday’s stars are still today’s stars, by and Business evolution large. Since 2000, seven companies have dominated the The largest companies of the last century were industrial top of the S&P/ASX: BHP Billiton, Rio Tinto, CBA, Westpac, corporations born of the Industrial Revolution in the 1800s: ANZ, NAB, and Telstra. Corporate giants are continually mass production companies such as Ford, Volkswagen, emerging in the US market. Here, the same giants just keep Toyota, GE and Bayer, and the suppliers of raw materials 34 getting bigger.” such as Exxon, Shell, BP and BHP. The ‘digital revolution’ is really this evolution of business, But over recent decades, computer, software and now rather than a function of technology. The tools that make internet companies such as Apple, Google, IBM, Microsoft it possible to ‘digitise’ business processes – broadband, and Facebook have been vying with these post-industrial smartphones, the cloud, the ability to analyse complex data 29 corporations to lead the pack. sets, social media – are today’s innovations. But they are extensions of the computing and online advances of the Over the last 15 years, a significant portion of job and 35 past few decades. economic expansion in the US has come from high- growth technology companies such as Amazon, Google, The introduction in the 1970s of the ‘digital computer’ was Salesforce, VMware, Facebook, Twitter, Groupon and disruptive; the switch from analog to digital mobile phones 30 Zynga. Apple’s new product innovations from 1999 was too. By now, neither technology requires the ‘digital’ onwards transformed it from a struggling organisation to 36 prefix; we take it as a given. the company with the largest market capitalisation on the Currently, entrepreneurs in tech startups are reimagining planet – quadrupling its value (to more than US770 billion) 31 industries from the ground up, using the best technology in just the past five years alone. we have today. Examples include US ride-sharing and taxi The entire US GDP is 15 trillion. Collectively, these nine services companies Lyft and Uber; health insurers such as companies, which barely existed a decade and a half Oscar; car manufacturers like Tesla; labour hire companies ago, have directly created almost a trillion dollars in like TaskRabbit; and accommodation services such 32 new wealth. 37 as Airbnb. Recently, Malcolm Maiden commented in The Sydney It is likely that technology and therefore tech startups will Morning Herald: “By virtue of its 119-year history, the US continue to have a disproportionate effect on global and Dow Jones Industrial Average encapsulates the corporate local economies. history of the world’s most important economy. It is a record of the rise and fall of ideas and entire industries that the leaderboard of the Australian market, the S&P/ASX 200, 33 rather tellingly, does not replicate.” Sydney2030/Green/Global/ConnectedTech Startups Action Plan “22% of Australia’s GDP , 479 billion, in 2025 will be disrupted from the application of seven digital technologies alone … But this doesn’t mean it will be captured by local companies.” Boundlss, 38 South East QLD Startup Ecosystem Report Peter Cooper, Founder, Sydstart and The Start Society It is imperative that local companies are able to create Disruption these economic and employment effects to benefit There are seven technologies that tech startups are most the Sydney community. Our community needs to be a likely using to create disruptive business solutions: mobile creator of technology, not just a consumer. internet, automated knowledge work, the internet of things, cloud technology, advanced robotics, autonomous vehicles 39 and 3D printing. It is estimated that by 2025, the annual impact on the Australian economy of these seven technologies alone will be 479 billion. That is, these technologies combined will 40 disrupt 22% of Australia’s GDP. The estimates of economic disruption include consumer surplus, new revenue and GDP growth, as well as redistribution of wealth due to the impact of technology. A mid-range estimate is that technology companies could capture 5.5% of the Australian economy by 2025. This equates to more than 115 billion in direct revenue going to 41 technology companies. But this doesn’t mean local companies will benefit. US taxi service and tech startup Uber, for example, has captured 42 10% of the Australian taxi market in less than two years. If the barriers to the growth of the local tech startup ecosystem are not removed, this revenue will likely be captured by more US-based firms. Sydney2030/Green/Global/Connected“I believe that Australia is more than capable of building global businesses that dominate on the innovation front. I also believe How many that the next generation of major Australian businesses has yet tech startups to be built.” 43 Niki Scevak, Cofounder Startmate are there? Tech startups are difficult to measure Tech startups in the City of Sydney Standard industry classifications haven’t kept pace with This survey also found that the largest number of startups 47 rapid changes to the structure of the economy. So while in Australia were located in the Sydney CBD ; Ultimo was technology startups are operating in all sectors, there is fourth and the Surry Hills/Darlinghurst area was seventh. All 48 currently little data to estimate their number or measure suburbs are in the City of Sydney local government area. their impact in Australia. That said, organisations within Of the 11 leading Australian co-working spaces identified in the ecosystem have undertaken a few of their own surveys 49 the survey by startups, three were in the city. and reports. Of the 22 Australian accelerators or incubators identified, 50 nine were in the city. See map on page 21 for an indication How many tech startups are there? of the number, scale and location. In 2012, there were an estimated 1,500 Australian tech These results suggest the concentration of Australian startups, ranging from one- or two-person startups created startups and the organisations that support them is in the previous 12 months, to more established businesses relatively high in the city. that had been around for a decade. Very few startups created between 2001 and 2006 still existed in 2012, but a Talent pool significant increase in activity from 2007 on resulted in the 44 creation of many of the startups documented in 2012. Tech startups – particularly those focused on the internet Of the 1,500 startups, 64% (960) were located in Sydney, – employ business entrepreneurs, software engineers, followed by 24% in Melbourne. creative designers and marketing specialists. The City conducts its own floor space and employment However, with more recent detailed analysis of this data, survey (FES) every five years, counting all business StartupAUS now believe that the best estimate available is establishments and workers in every building in the city. that there are 1,200 tech startups in Australia, or 0.06% of 45 all Australian businesses. The City’s FES data demonstrates that people with business knowledge, technology expertise and creativity A 2014 survey found that 48% of Australian startups were in 46 are working in the city. This creates a talent pool where NSW, followed by 18% in Queensland and 13% in Victoria. innovation can thrive and influence the launch and growth of startups. For example, the professional and business services sector experienced the largest employment growth over the five- year period to 2012, adding more than 21,920 workers to the city, bringing the total to 77,134 workers in that sector in 2012. Collectively, creative industries, the information and communications technology (ICT), higher education and research sectors in the city grew by 12.4%, or 9,715, to 76,952 workers over the same period in 2012. Sydney2030/Green/Global/ConnectedTech Startups Action Plan “Innovative industries bring good jobs and high salaries to communities where they cluster, and their impact on the local economy is much deeper than their direct effect … ” 51 Enrico Moretti, The New Geography of Jobs The largest sector remains finance and financial services, Talent concentrated in city areas with 96,517 workers, representing one-fifth (22%) of the Critically, employment trends vary when looking at areas city’s entire workforce in 2012. within the city. Some are developing clusters – places Figure 1 shows the top industries by employment in where people with specialised skills are concentrated. 52 the city. Areas where people with ICT skills are concentrated are ideal hotspots for the exchange of knowledge and ideas Figure 1: Top industries by employment that create startups. For example, between 2007 and 2012, Harris Street had the largest and fastest growing ICT workforce in the city. Over that five-year period, the ICT sector experienced extraordinary growth in the Harris Street village, growing by 3,023 workers or 253%. While larger firms such as Google and Fairfax were a key catalyst for this growth, there were also 80 small ICT businesses operating in Harris Street and contributing around 12% of the area’s total ICT workforce. Harris Street also experienced the largest increase in ICT businesses between 2007 and 2012, growing by 24 establishments to 94 businesses in total. Although the FES did not specifically identify tech startups, the study did show an increase in the number of workers 53 employed by businesses in the ICT services sub-sector. This sub-sector is represented by industries such as computer system design and related services, internet publishing and broadcasting and software publishing which can host workers with the specialised skills required of tech startup cofounders or employees. Sydney2030/Green/Global/ConnectedIn 2012, there were 782 ICT services businesses in the city, The strength of these ICT service–oriented industries within employing slightly more than 24,000 workers. Some 79% of the city reinforces its strong position in attracting individuals businesses in ICT services employed up to 19 workers and who, due to their specialised skills and talent, could be were classified as small businesses. encouraged to launch, join or support tech startups. In 2012, 39 of the 40 software publishing firms in the city were small businesses and they employed around 61% of the city’s entire software publishing workforce. Harris Street had the second-highest share of software publishing small businesses after the CBD and Harbour village, with 28.2%. The relative importance of ICT services becomes even more apparent when examining the city’s employment share at the national scale. According to the 2011 Australian Bureau of Statistics (ABS) Census, more than 56% of people employed in internet publishing and broadcasting and nearly 20% of people employed in software publishing in Australia worked in the city. The ABS statistical area of Pyrmont-Ultimo, which geographically aligns closely with the Harris Street village, was again noted as providing an important contribution to the nation’s ICT services workforce. In 2011, nearly 21% of persons employed in internet publishing and broadcasting in Australia worked in Pyrmont-Ultimo. Sydney2030/Green/Global/ConnectedTech Startups Action Plan Tech startup ecosystem: accelerators, incubators and co-working spaces This is a May 2015 estimate of the number of tech startups housed by incubators and co-working spaces and the intake of accelerators per annum. Only the co-working spaces that focus on tech startups are included. Hub Sydney is a large co-working space and this is an estimate of the number of member companies which are tech startups. Other new spaces Tech startup ecosystem: accelerators, incubators and co-working spaces such as The Ventura anticipate a growth in membership. Stone and Chalk is accepting applications. May 2015 MILLERS POINT H2 Ventures ( Stone and Chalk ( ( ( Springboard Tank Stream Labs ( POTTS POINT Sydney Founder PYRMONT Institute SYDNEY ELIZABETH BAY WOOLLOOMOOLOO Blue Chilli ( ( iCentral.co ANNANDALE ( RUSHCUTTERS BAY & Ventura Hub Sydney DARLINGHURST GLEBE ULTIMO HAYMARKET FOREST LODGE Fishburners ( & Sling Shot SURRY HILLS PADDINGTON CHIPPENDALE ( CAMPERDOWN muru-D ( Incubate Number of tech startups associated with location ( ( 1 REDFERN ( ( ( 10 ( EVELEIGH ( 50 NEWTOWN ( ( ATP Innovations, HUB Accelerate, Startmate & Ignition Lab 100 WATERLOO ( ( ( ERSKINEVILLE ( ZETLAND Number of tech startups associated with location ( ( ( 1 ALEXANDRIA ( ( ( 10 BEACONSFIELD ( Type of organisation ( ( 50 Coworking Space ( Incubator ( Accelerator ROSEBERY 100 ST PETERS ( ( ( ( ( ( Type of organisation ( Coworking Space Incubator ( Accelerator Sydney2030/Green/Global/Connected (