Denham Sadler
June 19, 2017

New FinTech plan for Melbourne

StartupLand

New FinTech plan for Melbourne

Showing the love: Melbourne is wooing the Aussie FinTech sector

The Victorian Government is now seeking applications for “experienced innovation hub operators” to establish a FinTech hub in Melbourne.

The hub will be based in the Goods Shed North in Docklands, which also houses Data61’s cyber security and innovation hub. The FinTech hub has been allocated 1500sqm in workspace with options for this to be expanded in the future.

The state government issued a request for proposals for the hub late last week. It is expected to evaluate proposals by August and decide on a tender by early September, with plans for the hub to be open as soon as possible.

It said the hub could provide for up to 200 workstations, and funding would initially last for three years.

Victorian Innovation Minister Philip Dalidakis said the hub would provide a centralised meeting point for the state’s burgeoning FinTech sector.

“The hub will strengthen the local FinTech sector by bringing startups together with investors, industry corporates and researchers in one concentrated and collaborative workspace,” Mr Dalidakis said.

The move was welcomed by FinTech Victoria CEO Alan Tsen, who said the hub would fill a gap in the local sector.

“What it signals quite clearly is the government’s intent to work with the ecosystem to keep building it out. This will be a real centre of gravity for FinTech, and that’s what we’ve been missing in Victoria. This will be a place where people can coalesce around FinTech,” Mr Tsen told InnovationAus.com.

“It’s a sector that has its own discrete, unique issues, so having somewhere where banks, super funds, insurers and the like know there’s a place for FinTechs is really helpful,” he said.

The winning applicant would receive funding from the government’s $200 million Future Industries Fund to cover the cost of design and fit-out, rent and other government support measures for at least three years.

The operator of the hub would be expected to provide targeted mentoring, incubation and accelerator services to “help resident startups to develop new business skills, find customers and bring their products and services to market efficiently.”

It’s believed the government will be presented with three broad options for the hub. Local Melbourne co-working spaces like York Butter Factory or the Melbourne Accelerator Program are likely to see this as a chance to expand into FinTech, while national players in the space like Stone & Chalk and Tank Stream Labs also seem like a good fit.

The strong government support and funding on offer is also likely to attract international players to the state.

Some in the industry believe that Stone & Chalk expanding to Melbourne to establish the hub would provide some much needed inter-city cohesion and make things easier for corporates and government with only having to work with one organisation.

On the local front, CBD-based co-working centre York Butter Factory would appear to be the front-runner. The organisation has been investigating the use of the Goods Shed as an innovation hub since 2014 and has been in discussions with the government since that time.

“We’ve had ongoing discussions and proposals with the government over the last two and a half years about the Good Shed’s potential to be an iconic Victorian startup location, and they have consistently displayed openness and excitement about the idea,” York Butter Factory co-founder Darcy Naunton said.

“We share many of the same goals for transforming the local economy through creating the social and physical infrastructure that enables tech companies to grow and thrive.”

Stone & Chalk also seems a potential frontrunner, with its current space in Sydney fitting the criteria for Melbourne closely. The FinTech co-working space has evolved into much more than that, and is the go-to space for both sides of politics when looking to make an announcement in the sector.

The organisation has also been planning an expansion into Melbourne for more than a year, and in May last year confirmed that it had applied for state government funding for the move, and was looking to raise about $2 million privately.

But Mr Dalidakis has hinted at his preference for an international player, pointing to the likes of The Floor in Tel Aviv and 500 Startups’ FinTech hub in London as potential partners.

“What we see around Australia is interesting, but what we’re trying to create is world-class. This presents opportunities to explore beyond the Australian boundary. What we’re trying to do is create success that isn’t just going to support Victoria but that is going to lead Australia,” Mr Dalidakis told InnovationAus.com.

Both Stone & Chalk and York Butter Factory declined to confirm whether they would apply for the government tender.

Mr Naunton admitted that the delay in establishing a hub in the location has been frustrating.

“Startup businesses and government are at opposite ends ,of the spectrum with regards to speed of execution so there have been foreseeable and understandable frustrations,” he said.

“It is nonetheless encouraging and exciting to see that the process is now one step closer to realising an outcome for Victoria.”

The winning tender would be given a series of key performance indicators, which offer an insight into what the government hopes the hub will provide. First and foremost is employment growth, with the indicators also including the value-added from the startups, the funding attracted from corporate sponsors, relationships with other FinTech hubs around the country and the amount of venture capital funding brought in by the residents.

The shed will be shared with “complementary government and private sector innovation, startup and incubator services”.

The Victorian FinTech sector has long been calling for a centralised location to bring the ecosystem together. The Melbourne FinTech Survey of local startups found that there is a common belief that the sector is lagging the rest of the country and world because of a lack of a hub to “anchor” the sector.

A broad group of members of the Victorian FinTech sector have been working with the government on the concept of a FinTech hub, but it’s believed that the speed of the tender announcement caught them by surprise.

MoneyPlace founder Stuart Stoyan said the proposed hub is much-needed for the ecosystem.

“It will help strengthen the ecosystem by providing a centre of gravity. Melbourne and Victoria have a fantastic, thriving ecosystem and there are some great companies doing amazing things,” Mr Stoyan told InnovationAus.com.

“It’s going from strength to strength but what’s missing is a centre where everybody can come together – that’s what the FinTech hub will do. It will have a gravitational pull.”

The announcement marks a new phase of the state government’s plans for the sector, Mr Dalidakis said.

“We’ve very deliberately and strategically focused on building a core infrastructure base on information security and cyber and data security," he said.

"We believe we’ve got some size and scale within the sector, and now is the opportune time to double-down on investment in supporting the FinTech community and creating a FinTech hub to see the sector thrive."

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