one spot behind Sydney<\/a>. An impressive achievement to be sure, given the geographic disparity, small population (i.e. small economic market) and relative youth compared with ecosystems like London and Tel Aviv, which have long churned out world leading technology companies.<\/p>\n <\/p>\n
The question then is what\u2019s stopping us from being better? Why can Melbourne not be a top-10 startup ecosystem, or even top 5? The answer comes in four parts: Ambition, or lack thereof; mainstream perception of software developers; non-existent pathway from university into startup; non-transactional local investor community.<\/p>\n
<\/p>\n
These are the reasons that keep us from improving as a startup ecosystem. Note that these are the obstacles that we can do something about. Distance and market size are hurdles, but ones we have to accept and work with.<\/p>\n
Ambition, or lack thereof \u2026<\/h2>\n
<\/b><\/p>\n
To put it bluntly, local founders lack ambition. Too many set out to make a me-too company and win the Australian market, rather than trying to build something truly innovative and compete globally. Coupled with this lack of ambition is a lack of urgency.<\/p>\n
<\/p>\n
Compared with the hustle of entrepreneurs in the US, founders here move at a glacial pace. Part of the problem is poor awareness: If you\u2019re moving faster than everyone around you, you feel good, you feel like you\u2019re going about it the right way.<\/p>\n
<\/p>\n
When we take AngelCube startups on the US roadshow at the end of the program, it is an eye-opening experience for our startups to see and meet their entrepreneurial counterparts, whose founders are acting with twice the urgency.<\/p>\n
<\/p>\n
The way to overcome this problem of ambition is via education. Programs like AngelCube, MAP, and Founders Institute help. Successful and experienced ex-pat entrepreneurs returning from overseas and getting involved in the startup community also speed things up. Like a village, our children need role models to learn how to behave.<\/p>\n
Perception versus Reality of Software Developers<\/h2>\n
<\/b><\/p>\n
Each year, for over a decade, industry demand for software developers has increased. Not surprising really. Supply on the other hand is decreasing. In fact, university enrolments in computer science degrees have steadily decreased year over year during the same time period. Yes, you read that right, decreased.<\/p>\n
<\/p>\n
This trend suggests a rather large disconnect between the perception of developers amongst students and the reality of the developers in industry. Whilst in startups \u201ccoders\u201d are often referred to as rockstars or ninjas, it\u2019s likely that amongst students the perception is of some neck-beard lacking elementary hygiene skills, tucked away in a dark room not much bigger than a closet. And there doesn\u2019t appear to be any initiatives currently tackling this problem. Perhaps we can take solace in a current shift towards engineering and away from law in the US.<\/p>\n
<\/p>\n
Put simply, coding has an image problem. And as it involves the young, this needs to be tackled both at the school level and at the parental level.<\/p>\n
Non-existent pathway from university into startups<\/h2>\n
The dominant pathway for top university graduates is straight into a corporate job. Very few choose, or even consider, going out on their own. The common pathway into entrepreneurship locally is via a corporate job or working as a freelancer, some years after university.<\/p>\n
<\/p>\n
This is in stark contrast to what you see in the US. Where Stanford, Harvard, and MIT are veritable breeding grounds for founders, and the status \u201cdrop-out founder\u201d is worn as a badge of honour. Our local universities are starting to catch on but the going is slow.<\/p>\n
<\/p>\n
Over a decade ago, along with the first dot-com boom, the business plan competition appeared. First in Melbourne by the Melbourne Business School, then championed by RMIT. Now that we know better, and business plans are out of fashion, we\u2019re starting to see university-driven accelerators.<\/p>\n
<\/p>\n
This time it\u2019s the engineering department out of the University of Melbourne that has taken the first step, and in the three years the program has been running, it has seen fantastic results. Monash is trialling something similar, but as yet there\u2019s no word out of RMIT or Swinburne\u200a\u2014\u200auniversities with the most popular computer science programs\u200a\u2014\u200aabout doing something similar.<\/p>\n
Non-transactional local investor community<\/h2>\n
Whilst complaining about investors is something that startups take part in all over the world, it certainly appears that on a local level our startups are losing out. Ignoring the media hype about \u201cbrain drain\u201d (we should expect to see successful startups set up office overseas as part of their natural progression into world leading companies), the difference in terms being offered to startups here versus abroad is marked.<\/p>\n
<\/p>\n
Current state of the art funding in San Francisco is very much \u201cfounder friendly\u201d, terms from local investors tend to be anything but. And whilst we can\u2019t expect the same level of investment that happens in the US, one would think the difference between levels of investment across Sydney and Melbourne would be minimal.<\/p>\n
<\/p>\n
Yet a quick look at the relative portfolios of two leading Angel groups shows that Sydney Angels have made nearly twice as many investments as their Melbourne counterparts: 31 vs 16. Sadly, the transactional nature of our \u201cbig city\u201d neighbours appears to give them the edge over our more risk-averse investor community.<\/p>\n
<\/p>\n<\/p>\n
<\/p>\n
In summation, we\u2019re doing well, but could do better. The things keeping us down\u200a\u2014\u200athat we can realistically do something about\u200a\u2014\u200aare identifiable and actionable. And, in most instances, there are initiatives set up to tackle the problems outlined. But like any good entrepreneur we\u2019re impatient, things need to go faster, we need more urgency, more of a concerted effort in tackling these problems.<\/p>\n
<\/p>\n
As an ecosystem we need to make more noise about our successes, we need to be more aggressive getting talent into the space, and we need to work together in order make this happen. Melbourne is one of the most liveable cities in the world, let\u2019s make it one of the most entrepreneurial too.<\/p>\n
Notes<\/h2>\n
There\u2019s a few problems not mentioned, which are problems nonetheless. These include; our small population and therefore small economic market; the Australian government\u2019s prohibitive Employee Share Option Plan (ESOP) which makes it hard for startups to attract world-class talent; and a tall-poppy culture that restricts our celebration of entrepreneurs. These are certainly problems faced, but they are not Melbourne specific problems.<\/p>\n
<\/p>\n
This article originally appeared on<\/i> Medium.<\/i><\/p>\n
<\/i><\/p>\n
<\/i><\/p>\n
Amir Nissen is program manager at AngelCube.<\/i><\/p>\n
<\/p>\n
Do you know more on this story or have a tip of your own? Raising capital or launching a startup?<\/i> . Follow StartupSmart on<\/i> Facebook<\/i>,<\/i> Twitter<\/i>, and<\/i> LinkedIn<\/i>.<\/i><\/p>\n","protected":false},"excerpt":{"rendered":"
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