3 surprising things about Australia’s startup scene

21st February, 2017

The Startup Muster 2016 report is full of stats on Australia’s startup scene, but which were the most surprising to its Chief Executive, Monica Wulff?

Last week Startup Muster released the report, looking at the state of play in startup land.

The comprehensive report is full of great stats and lovely infographics, but some of the findings took Wulff by surprise.

Here are three of them.

‘I just had to do it’

There was an increase in the number of people who selected ‘I had no other option’ when asked why they had gotten into the startup game.

While Wulff said she had yet to crunch the data, she had a suspicion that this response largely came from female founders.

“In 2015 we looked at it by gender and there were a lot of women who responded ‘none’ or ‘unknown’, so we were clearly missing something,” Wulff said at PauseFest in Melbourne.

“We added a lot more options to that question, and ‘I just had to do it’ came out as a really strong identifier.

“I haven’t put together the data on whether it’s a female or male response but going by past precedent I wouldn’t be surprised [if it were majority female].”

In the ‘I had to do it’ category, the reasons for starting a company were:

  • ‘Circumstances made having my own business desirable’ (23.7 percent)
  • ‘Being single’ (7.4 percent)
  • ‘Redundancy’ (5.5 percent)

Is outsourcing a dirty word?

Outsourcing. Boo, right?

It costs Australian jobs and deprives Australian companies work.

Outsourcing is a growing ‘business hack’ for millennials, so you’d be forgiven by thinking that a lot of tech-savvy startups were outsourcing everything to India and China.

Aside from the average age of a founder actually being 35 to 40 years old, it turns out the effect of outsourcing isn’t as bad as you might assume.

In fact, it could be read as a net positive for Australian small businesses.

“About 70 percent of work is outsourced to Australia, which is interesting because we need to re-frame our thinking around outsourcing being bad,” said Wulff.

“Outsourcing equals a loss of job, right? But as it turns out, you’re helping independent small to medium businesses because you’re utilising their services.”

It’s one way SMEs could become a net beneficiary from a startup boom.

Few startups are applying for government grants – despite a need for cash

Just 33 percent of founders had applied for a grant and 22 percent of founders had received them.

It’s especially surprising when more than half of startups feel they need additional funding within the next 12 months just to keep operating.

Compare the 33 percent who had applied for grants that with the more than 70 percent who tip their own money into their venture and 32.6 percent of those who had successfully gone through private equity.

According to Wulff, there’s a simple reason why startups aren’t applying for what could be free money.

“The top response was that [applying for grants was] time-consuming,” said Wulff. “We know startups and one of the things they have an issue with is that they have no time.”

“[Also, startups] don’t want to get stuck in the ambiguity of not knowing whether they are going to get the money.”