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Sydney Start-up Scene: City Profile For Small Businesses

Harbouring a new start-up scene

By Oliver Milman
Tuesday, 28 February 2012

Sydney

 

Population: 4.5 million

Start-up survival rate: 73.4% (2007 to 2009) 

 

While few people – even Melburnians – would dispute Sydney’s position as the financial and big business hub of Australia, the city has suffered from a series of setbacks in recent years.

 

Dragged down by NSW’s anaemic economy and Sydney’s own problems, the city is in danger of being overtaken by Perth and Melbourne in terms of GDP importance.

 

Indeed, a recent report based on Australian Bureau of Statistics figures shows that Sydney’s contribution to overall GDP has halved in the last 20 years, with Sydneysiders’ frequent grumbles about the cost of housing and clogged transport arteries seemingly well justified.

 

sydney-bridge-250.jpg

 

That said, Sydney is still a heavy hitter when it comes to the start-up world, although some budding entrepreneurs have complained about the lack of “community” between new ventures.

 

The innovative heart of Sydney still beats, however, and a number of initiatives launched in the city by the state government and entrepreneurs should start to bear fruit.

 

Seed accelerators PushStart and Startmate were founded in Sydney, while incubator Pollenizer continues to churn out graduates that hit the big time, ranging from group buying business Spreets, which was sold to Yahoo for $40 million, to Twitter payment app Pygg, which is tipped for big things after raising $600,000 in funding.

 

The Silicon Beach networking meet-ups are now well established in Sydney and co-working spaces are beginning to take hold too, with Fishburners recently opening an additional space in Darlinghurst for start-ups eager to share ideas, and desks, with others.

 

Indeed, such is the growth in nimble, tech-savvy businesses that local incubator BlueChilli has put together this rather fun map of the leading Sydney players.

 

 

Following a worrying dip in 2009, Sydney’s position as a premier tourist destination has been strengthened by a 13% year-on-year jump in visitors in 2011, with 7.7 million people spending their money at local Sydney businesses.

 

Meanwhile, the number of female-run businesses is on the up, growing 7% since 2006, compared to just a 1.9% rise in male founders. More than a third of the 650,000 small businesses across NSW are now run by women.

 

With the rapid economic development of the western suburbs, a new NSW government that has promised to sort out the transport mess, and increasingly popular start-up events such as Launch48 and Tech23, there is every indication that Sydney’s powerhouse days are far from behind it.

 

Sydney’s Silicon Valley

 

Macquarie Park, in Ryde, has been dubbed ‘Australia’s Silicon Valley’ housing businesses in the communications, medical research, pharmaceutical and IT&T sectors.

 

 

A $557 million “special economic zone” has been proposed for western Sydney, but local start-up experts feel that there are still gaps to be filled.

 

“Moving forward, there isn’t a central area for early stage tech, spread between Surry Hills, Redfern to North Ryde,” says Phaedon Stough, managing partner of Mitchell Lake and organiser of Innovation Bay, a series of start-up pitching dinners.

 

“This needs to change or evolve: There needs to be a strong precinct for early stage companies to share space and network with like-minded folk.”

 

Strengths

  • Home to a large proportion of the best-known businesses in Australia, including Microsoft, eBay, Vodafone and Coca-Cola.
  • Access to programs such as PushStart, Innovation Bay and Startmate.
  • Home to a large VC community and other backers such as the Sydney Angels network.
  • Well-established as an international trading hub, with strong links to US and Asian markets.
  • Lifestyle is consistently lauded as among the best in the world.

Weaknesses

  • Transport congestion is so bad that it has been blamed for a dip in GDP.
  • Renting office or factory space in Sydney can be prohibitively expensive.
  • Still needs a sense of start-up community and identity.

Notable start-ups

  • Atlassian
  • Freelancer.com
  • Spreets
  • Google Maps
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