Since moving back from New York to work on Qwilr 6 months ago, I’ve been reflecting on the changes to the Sydney startup scene. It may not be perfect, but it has certainly come a long way!
I was first exposed to the Sydney start up scene in 2008…
In 2008 I joined my first startup, ReadHowYouWant, where I worked like crazy on the early days of the eBook revolution for 2 years. After that I had some fun working at Google in Sydney & New York (more on that in other blog posts). Now that I’m back in Sydney, I’ve been amazed by how much has changed since 2008.
ReadHowYouWant was unusual in that the founder was in his 50s, had started a number of tech companies before (two of which had exited), and knew enough High Net Worth Individuals to get together, combined with his own funds, a solid ‘angel’ round (not that anyone called it that). When we went to technology events it was reasonably rare to see people below the age of 30.
In 2008 if you were a young entrepreneur wanting to start a tech company in Sydney, there was:
- no obvious path to begin (especially true for first time entrepreneurs)
- no obvious way to raise money
- hardly any money at all for tech startups anyway
- hardly any community at all – certainly not for consumer or SaaS products
- very few success stories
- no mentorship
- very limited (engineering) talent on the ground
- hardly any interest from the press
The Sydney start up scene today has completely changed on every point
The most obvious change to this is that Sydney is now filled with around half a dozen incubators which provide cash, mentorship, connections and community. Perhaps more importantly, they provide an obvious and relatively easy way for first-time entrepreneurs to get a great start.
Getting money from other sources has also been made considerably easier. Over the past four to six years there has been a significant increase in the number of angel investors, and even a handful of VCs (like Blackbird, SquarePeg and Starfish) have entered the market. This means that a startup can now get support through an incubator for their first three to six months, get some angel funding for the next six to twelve months and then, if they’re lucky, do a Series A to help them grow for the next year or more.
This process has been excellently supported by the Federal Government in the past (and hopefully in the future) through the R&D tax credit and Commercialisation Australia. We sincerely hope this isn’t interrupted by changes announced in the budget.
Finding world class talent is always incredibly difficult. It used to be almost impossible in Sydney. It’s still very hard, but it’s getting much better. From my perspective at Qwilr two forces are driving this. First, the growth of large world class engineering teams in Sydney – examples being Atlassian and Google. A portion of these engineers are slowly poking their heads outside of their luxurious campuses to explore the startup world. Second, there is a growing trend of people returning to Sydney from the US and UK to work on startups in the best city in the world. Among our small team of four, I came back from Google in New York, and Ben, our lead engineer came back from working with Microsoft in Seattle. We hear of others returning all of the time.
This means that Sydney now has everything needed to get good startups off the ground: talent, cash and a community willing to give advice and support along the way. It also has its share of success stories, and founders coming back from rounds two and three.
There is still a long way to go. Most companies that need to raise more capital after their Series A round will look to the cash-rich US for better valuations and deeper bank accounts. Many will move there too. The talent pool is better but still sorely lacking in many areas, and there are some dodgy investors out there as well.
But to be honest, I am amazed at how far the community has come and can’t help but feel very positive about it’s path for the next 6 years. If Sydney invests in the community, government supports the sector and (young) people continue to want to work in tech we will have a real chance to be one of the top five places in the world for tech startups – and that would be a great & valuable thing.