AI and deep tech are permeating through Australia’s startup sector, while founders are getting older and increasingly eyeing overseas opportunities, according to the latest Startup Muster report.
Released in Sydney on Monday night, the latest report shows startup founders in Australia aren’t as young or inexperienced as the Silicon Valley image might suggest.
The average age of an Australian founder is now 47, while almost half have had previous startup founding experience, both increases on prior years.
Three quarters of startups are mostly focused on business customers, with only 27 per cent chasing consumers.
The rise of deep tech was a surprise, with research and development heavy ventures now accounting for more than one in five Australian startups.
Artificial intelligence is booming, with 35 per cent of surveyed startups targeting it with their products and services – a jump from 24 per cent last year.
Startup advocate Murray Hurps, who has led the annual Startup Muster since 2013, said AI’s “incredible impact” is being felt in the startup sector as well.
“We’ve seen AI increasingly represented in the kinds of products and services being offered, founding team skills, current team skills, skills that startups plan to hire, and the skills that people identified as missing in job candidates,” he said.
Software development had a similar leap from 24 per cent in 2023 to 32 per cent this year. The MedTech, HealthTech or BioTech industry classification was also up, while other industries stayed consistent.
The Startup Muster is back again in 2024 thanks to private sponsors after the government funding lifeline that revived the survey in 2023 ended.
The report is considered one of the most in depth and longest running in the world, this year validating more than 141,000 answers from 744 people in the startup community.
The latest version sheds light on an Australian ecosystem facing economic headwinds that appear to be restricting company launches and fund raising.
“Economic pressures might be starting to show in the data,” Mr Hurps said, “with an increase of founders reporting that ‘life circumstances required a stable income’ was their primary challenge when launching — up to 52 per cent of founders vs 40 per cent last year.”
“This might also be showing in the business plans of startups, with startups who haven’t raised funding increasingly saying it was because their business plan doesn’t require it — now 39 per cent of startups who had not raised funding, versus 27 per cent previously.”
The new report also reveals attitudes to government support efforts, including a poor rating for NSW relative to other states after the Minns government scaled back support ahead of a new innovation plan that is yet to materialise.
Most respondents see the NSW support as average or worse, despite the state’s MVP grant being the most popular grant application, while Victoria, Queensland, South Australia and Western Australia all rated better for local startup support.
13 per cent of startups secured support through the federal R&D Tax Incentive, making it the most popular mechanism and an increasing part of startup funding, according to the report.
But startups also voiced frustrations with the blunt incentive, which still comes with a complex application process and needs more guidance, according to the responses.
Federal Industry minister Ed Husic is seen as the sector’s most supportive member of parliament, despite his new flagship programs doing less for startups than popular mainstays like the R&D Tax Incentive and state grants.
More than a third of the surveyed startups indicated their companies do not align with any of the National Reconstruction Fund’s six priority investment areas. When they do it is typically with the ‘enabling capabilities’ priority, which has $1 billion stretched over 10 years for a variety of technologies.
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