I recently answered this question on Quora.
As someone who works with startups through my agency in Sydney, I find that Sydney is already not a bad place for start ups and entrepreneurs.
The key perception where the ‘not great’ piece comes in is the relatively poor valuation entrepreneurs based in Sydney or for that matter, in Australia, attract. Please note the word relative is important here.
Through work, I get to travel to different countries often and I have noticed that a large part of the problem is about the risk-taking capacity in the culture.
The Australian culture generally, compared to other cultures, is more risk averse. This is especially true for the corporate frameworks and ideas related to business. That is not necessarily a bad thing because arguably that kept the banking system strong through the Global Financial Crisis. However it does affect the view funds and investors take on startups when they are looking to invest. This problem requires a longer term solution and mind set. Of course, competition in the capital market also helps.
Size of the market is another issue for both valuation and the size of the startup scene. The size of the Australian market means that the size of the start up scene will relatively tend to stay small. But I generally find a lot of startups have a larger view and often consider different parts of the broader world as a potential addressable market. As a result you also see a lot of startups migrate to the US.
It will be interesting to see when startups also consistently migrate to Asia – but that’s for a different discussion. What can help is more Australian startups, operating out of Australia, look at Asia as a target market and create products and services for it.
I’m fairly excited about the potential of programs such as Incubate have to increase relevance of entrepreneurship at Universities. Of course the challenge is much larger as Universities will certainly need to play a bigger role to play including with culture and customer centric thinking.
Another challenge is that despite the recent upswing in accelerators and support groups in the scene, the more known startup scene is a little ‘clicky’. The networks that exist tend to know each other well in a relatively small group and it takes a while to break through it. I don’t think the intention is to be like this at all and from everything I’ve seen, this community wants to be welcoming and tries hard to be. But I find that a lot of people on the fringe find it intimidating to approach and find their own way to innovate independently.
I come across these people often and work with many of them. The real challenge is to understand how you can capture the stories of these startups as well and help them share their stories with the rest of the community.
Lastly for anyone to be involved with startups (including everyone reading this), it is critical to recognise that startups are different, not always sexy and span various industries beyond technology. Australia and Sydney contribute through some amazing IP based or even more conventional businesses that often get ignored by the startup scene here as one of them. Embracing them in all shapes and helping them is everyone’s responsibility.