Presented by Invest Victoria
Melbourne is fast establishing itself as Australia’s Tech City. With an impressive stable of home grown start-ups and a growing number of U.S. big names, Melbourne has reached a critical mass in its ecosystem that has now also begun attracting the attention of venture capital.
Melbourne is the fastest growing city in Australia. It’s projected to overtake Sydney to become the largest city by 2030, and offers the biggest opportunities for launch and growth, says Philip Dalidakis, Minister for Innovation and the Digital Economy for the State of Victoria. Its reputation combined with its status as one of the world’s most livable cities makes is making it a magnet for tech professionals.
Melbourne is already far ahead of most of the world for the number of founders and software engineers living there who were born in another country. “One in four entrepreneurs in Melbourne moved here from another country specifically to begin a startup,” Dalidakis says. “That’s one-third higher than the global median, and a higher proportion than other significant startup centers like Singapore and Tel Aviv, too.”
Melbourne is home to a wealth of tech talent
The attraction of international talent is only half the story. Melbourne is also home to Australia’s highest ranked university and is producing more tech graduates than anywhere else in the country. This ready supply of talent is proving a huge driver in why U.S. companies are heading there to set up their Asia-Pacific headquarters.
In 2016, payments company Square took Melbourne up on their expansion proposition when the company opened its first Australian office there. Since then, business has ramped up in a growing Australian market — the number of Australian businesses using Square has increased by 150 percent since March 2017. The company’s local headcount will exceed 100 employees over the next few years as it invests in the local workforce and adds its first international engineering lab.
Square joins a wide swath of major tech companies expanding into Australian territory, including Apple, IBM, Slack, and Google, as well as a growing array of startup firms looking for that sweet international funding. In fact, funding levels for Australian venture capital funds reached a record level in 2016, with $78 million invested in 20 Melbourne-headquartered companies.
Setting the Melbourne scene
Melbourne spawned a number of global businesses that grew out of the ’90s dotcom boom, like Realestate.com.au, Seek.com.au, and Carsales.com.au. And the state government, through LaunchVic, has committed millions of dollars to support infrastructure for startups looking to launch into the global market, like their recent startup success stories Redbubble, Tribe, Envato, and Vinomofo.
With around 1,100 tech startups, Melbourne now has about twice the average for other ecosystems at a similar developmental stage. Dalidakis points out the estimate from the State Government of Victoria’s report — that by 2020 Victoria’s digital economy could be worth $50.8 billion and represent an even greater opportunity for investors.
Going global from Melbourne
The next wave of Melbourne tech companies are also taking on global markets while making inroads domestically, including Airwallex, Culture Amp, Envato, AuctionFox, Rome2rio, 99Designs, and more.
In fact, this global ambition is a large part of how Airwallex came to attract the second-largest financing deal for an Australian startup in history. The round was led by existing investors Tencent, the $500 billion Chinese internet giant, and Sequoia China. Other participants included China’s Hillhouse, Horizons Ventures — the fund from Hong Kong’s richest man, Li Ka-Shing — Indonesia-based Central Capital Ventura (BCA), and Australia’s Square Peg, a firm from Paul Bassat, who took recruitment firm Seek to IPO and is one of Australia’s highest-profile founders.
“Melbourne is Australia’s tech city, Australia’s fastest-growing city, and one of the world’s most livable cities,” Dalidakis says. “Melbourne’s digital infrastructure, location for expanding U.S. tech business, our talent, and ease and cost of doing business are a huge advantage for any company looking to make their mark globally.”
“With the help of the international dateline making follow the sun operating models seamless, we joke that its already tomorrow in Melbourne, and we want to see more U.S. companies taking their business to the future.”
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