What’s behind Australia’s declining number of startups?

Last month, Startup Muster released its annual report containing the key statistics regarding Australia’s startup ecosystem – and some of those stats have been turning the heads.

One particularly eye-catching figure in the report was that in 2018, Australian startup numbers dropped by 12 percent, their first ever recorded decline.

The question is, how do we account for this shrinkage and what does it mean for the future of Australian innovation?


Educate to foster better founders


According to Startup Muster’s Co-Founder Murray Hurps, this drop in numbers doesn’t necessarily mean that the ecosystem is under immediate threat, but it does raise concerns for the budding startup founders.

“The ecosystem now has a smaller number of more advanced startups.” Hurps told The Pulse. “These startups are more likely to be receiving support from accelerators and investors – which is good, but I do have concerns that the next generation of startups are not being started as they have been in previous years.”

When asked how he believed these concerns are best addressed, Hurps said there could be a large opportunity in leveraging the expertise and influence of people outside the typical startup industry.

In particular, Hurps said that educating the next generation needs to start when they’re very young – with the primary and high-school parent (and teacher) demographic “needs to be doing more to encourage entrepreneurship in our next generation of startup founders.”


Perhaps less is more?


From a different point of view, a decline in the number of Australian startups being founded can also mean that more thought and effort is going into establishing such businesses, which means that those startups still being founded are likely to be of a higher quality.

The same annual report from Startup Muster found that, out of the 49.2 percent of startups who are seeking funding, 45.1 percent are planning to raise between $100,000 and $1,000,000 of investment in the next year – a staggering statistic showing how crowded the investment space is.

This crowded environment has caused VCs and investors to spread smaller investments across more businesses.

With numbers trending slightly downwards, VCs and other investors are more likely to hand out larger amounts of capital to promising startup founders – ultimately enabling these well-funded businesses to theoretically grow innovation standards to unprecedented levels.

READ: Funding a new business


Solve problems for startup success


A more competitive startup landscape may make things more difficult for aspiring founders, but this also means those who find success will do so based on true merit.

Creating innovative solutions to the world’s problems has never been an easy task, and so the Startup Muster report is unlikely to dissuade those committed individuals from pursuing their ideas.

But it is worth noting that, between two startup concepts of relatively equal value, it’s the founders with the most business development nous that will ultimately succeed. And that means combining hard-won experience with the very best of practical knowledge.

Experience may be difficult to come by in short order, but the knowledge part can be easily supplemented – particularly given how many startup events, conferences and other informative content streams there are available at the moment.

 

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