Brisbane, Adelaide surge up ranks of world's top emerging startup hubs

Brisbane, Adelaide surge up ranks of world's top emerging startup hubs

Brisbane. Photo: Jesse Collins, via Unsplash.

Sydney and Melbourne continued to feature prominently in Startup Genome's latest Global Startup Ecosystem Report (GSER) with rankings of 21st and 32nd respectively, but it was the smaller cities of Brisbane and Adelaide that made the biggest leaps up the ladder of emerging hubs with extraordinary growth rates since mid-2021.

Buoyed by its developments in life sciences, space technology and artificial intelligence (AI) - with notable 2023 raises including Fleet Space Technologies' $50 million Series C and Fivecast's $30 million Series A - Adelaide cracked into the report's Top 100 Emerging Ecosystems for the first time, notching ecosystem value growth of 89 per cent to reach $2 billion.

"Adelaide offers founders the perfect environment to fuel global ambition. From an affordable lifestyle, low-cost offices, GigCity internet, and universities that produce amazing graduates, it’s no wonder Adelaide is a shining star in tech innovation," MyVenue CEO Tim Stollznow said in the report, which underscored industry event _SOUTHSTART and a new Diploma in Entrepreneurial Growth at Flinders University as examples of the city's startup spirit.

The median seed round in Adelaide between mid-2201 and the end of 2023 was the highest in the country at $1.3 million, while total venture capital (VC) funding in the South Australian capital between 2019 and 2023 was $299.3 million. 

Despite Adelaide's high growth rate, this VC funding level is still only 17 per cent of the funding for Brisbane startups over the same period, 7 per cent of the Melbourne figure, and 3 per cent of the $9.5 billion raised by Sydney startups over those four years. 

Sydney had the lowest growth in ecosystem value of 3 per cent to $72 billion, and this was actually down $4 billion on the prior report. But upticks in the other three Australian cities highlighted helped to compensate for the decline.

Brisbane's ecosystem value rose by 81 per cent to $10.8 billion, and the city was placed in the 31-40 bracket of the top emerging cities, compared to 41-50 last year and overtaking the likes of Portland, Hamburg and Lithuania.

"Brisbane distinguishes itself from other Australian cities with a range of innovation and entrepreneurial activities," the report's authors wrote.

"Defense technologies, cleantech, unmanned aerial systems, medtech, and deep tech are all well represented. 

"This variety is reflected in the region’s startup success stories, which include Edtech platform Go1, advanced machinery maintenance business GreaseBoss, video-editing software provider Clipchamp, needle-free vaccine maker Vaxxas, and Deep Tech-driven flood prediction company FloodMapp."

Other Brisbane success stories noted in the report include Vaulta, which produces recyclable, high-performance batteries, and mining-tech startup Plotlogic, among others.

Brisbane also had the longest time to exit of the four cities at 12.2 years, compared to 11.6 years in Adelaide, 10.3 years in Melbourne and 10.1 years in Sydney.

For an Australian city that ranks very highly on the overall list, Melbourne was able to rise by one spot to 32nd amidst 23 per cent ecosystem value growth to $26.5 billion, with Startup Genome drawing attention to the Victorian capital's thriving fintech sector, life sciences prowess with the likes of CSL (ASX: CSL) calling it home and Aravax raising $66 million earlier this year to find a cure for peanut allergies.

"Melbourne is paving the way in several groundbreaking, rapidly evolving sectors, backed by a strong support network," the report's authors wrote.

"The State of Victoria’s startup agency, LaunchVic, actively supports Victoria’s startup ecosystem, which comprises more than 3,400 startups."

Melbourne had the lowest median seed round of the Australian hubs included at $709,000, and the second-highest median Series A at $6.1 million. Melbourne's number of companies that achieved unicorn status over the period stood at three, which is on par with the global average.

Sydney however remains the jewel in Australia's startup crown with its ecosystem value still close to three times that of Melbourne, and the highest number of exits in 2023 at 51, versus Melbourne's 41, Brisbane's 15, and three for Adelaide.

"Sydney's natural vibrancy makes it a first choice for creative talent, technology startups and investment," Investment NSW deputy secretary Katie Knight said in the report.

"The wealth of what's on offer is what secured Sydney as the only other home outside of Austin, Texas to host SXSW."

Indeed, Sydney may be an expensive city but it can also attract talent with an average software engineer salary of US$124,000, which is 76 per cent higher than the average in Melbourne, 80 per cent higher than in Brisbane and more than double the average salary in this profession in Adelaide.

The report highlighted numerous Sydney startups with a focus on the climate-tech, med-tech and quantum technologies sectors, including Viridos' $35 million Series B, Saluda Medical's $150 million late VC round in spinal cord stimulation, and Series A rounds for Diraq and Silicon Quantum Computing to the tune of $50.4 million and $29 million respectively.

"Sydney, the capital of New South Wales, is the leading tech and innovation ecosystem in the Southern Hemisphere," the report's authors wrote.

"Home to over 3,000 tech startups, it is the regional HQ for more than 600 multinational companies capitalising on the state’s research, talent, and business-friendly regulatory environment. Internationally-recognised unicorns with global HQs in Sydney include Atlassian, Canva and Immutable.

"The latest unicorns generated out of Sydney include workforce management platform Deputy, and crowd-sourced cybersecurity company Bugcrowd."

The report noted that 61 per cent of all capital raised in Australia in 2023 was in NSW, with international tech giants investing heavily in Sydney, such as Google’s $1 billion Digital Future Initiative, Microsoft’s new Data Centre Academy investing in skills and training, and Amazon Web Services cloud computing expansion.

In last year's report Perth and Canberra were ranked as Oceania's top emerging ecosystems, but this year they just ranked 6th and 7th with no further mention. New Zealand was ranked third in Oceania, sitting above Brisbane in the emerging ecosystem rankings in the 21-30 band, although its ecosystem value of $9 billion is below that of the Queensland capital.

Silicon Valley kept its position as the world's top startup ecosystem, followed by New York City and London which were tied in second place. Tokyo entered the Top 10 for the first time, while Seoul rose by three spots into 9th place. There were large jumps from Miami (seven places to 16th) and Paris (four places to 14th), while China's two leading ecosystems of Beijing and Shanghai fell by one and two spots respectively, to 8th and 11th.

"As we present Startup Genome’s 2024 Global Startup Ecosystem Report, we find ourselves at a pivotal moment in the tech world. The rapid growth of generative AI has been transformative, raising both exciting prospects and important concerns," said Startup Genome founder JF Gauthier.

"Ethical AI is at the top of our minds, but the re-concentration of global startup ecosystems is also an essential issue for us, considering our mission to ensure every city and country captures its fair share of the new economy. 

"Silicon Valley’s renewed dominance - with San Francisco’s Mission District attracting top AI talent in a new gold rush - prompts questions about global equity in innovation."

Gauthier said cleantech had emerged as the only growing startup sub-sector besides AI, underscoring the potential of startups to develop solutions and drive substantial global change, not only in technology, but also in sustainability.

"Thankfully, along with our economies, global startup ecosystems are on the brink of a new growth cycle," Gauthier said.

"A slight yet significant uptick in investments in the first quarter of 2024 suggests that we may have reached the bottom of the recent funding downturn. 

"History tells us that those who invest during or immediately after a downturn reap the highest benefits. Now is the time to start building, capitalising on the unique opportunities that arise in times of transition."

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