Startup scenes are often just as important to the formation of a company as their respective founders. What constitutes a good example?
Many people often link a startup’s success with its founder, with many famous tech businesses publicly represented by charismatic individuals.
This trend has dominated the scene for decades. Global giants such as Microsoft and Apple will always have a connection to their founders, as Bill Gates and the late Steve Jobs were both formative in their respective companies’ early stages.
However, there’s another variable that’s just as important, with the location or scene often also having an influence on a startup’s success, especially in the case of California’s Silicon Valley.
The role startup scenes play in the formation of these companies has been the subject of a number of recent investigations, allowing entrepreneurs to get an idea of what they should be looking for when choosing a base of operations. From government support startups can access to the proximity to international markets, there are a range of variables these companies need to keep in mind.
Lessons from Canada
In the wake of its Global Startup Ecosystem Ranking 2015 report, management consulting firm Compass investigated a prominent startup scene that missed out on a top 20 ranking.
Listed at 25th overall, Waterloo, Canada represents the challenges facing medium-sized cities that attempt to rival established successes such as Silicon Valley. According to Compass, three locations matching this description (populations between 2 and 3 million) cracked the top 20: Austin, Tel Aviv and Vancouver.
However, Waterloo consists of just half a million people, leading Compass to declare its effort in reaching 25th on the global stage a “real-life David and Goliath story”. The result is even more amazing with the knowledge that top-20 locales boast populations between 10 and 30 times higher than Waterloo’s.
Compass identified the key traits the city of Waterloo relies on, revealing features other cities should strive to achieve and entrepreneurs should look out for. The organisation believes the sense of community within the scene is essential to its success, an initiative usually recreated in other cities in the form of startup hubs.
The Waterloo startup scene isn’t perfect though, and its shortcomings provide valuable lessons for companies looking to expand internationally. With Waterloo around 160 kilometres from the US border, its startups should be making a concerted effort to break into this market.
According to Compass, about 50 per cent of Waterloo startups’ clients are from outside of Canada. In comparison, mid-sized success stories such as Tel Aviv sell almost three-quarters (74 per cent) of their goods and services to foreign markets.
Compliance challenges in NSW
While businesses of all shapes and sizes have their fair share of compliance concerns, these conditions may impede startup growth. A joint white paper produced by the Committee for Sydney and KPMG found this is regularly the case for NSW startups.
The publication noted the challenge in the balancing act between offering funding initiatives and grants for startups in the region without forcing them to rely on government support or jump through hoops in the compliance process.
According to the white paper, there are more ways for local and national governments to support startups beyond providing them with funding. According to the Committee for Sydney and KPMG, these can involve initiatives as wide ranging as additional education or advertising support.
Interestingly, the white paper revealed that, while almost two-thirds (64 per cent) of startups in the region are aware of available grants, only 39 per cent have actually submitted applications.
The reasons for this limited uptake are dominated by concerns over a lack of resources. Although few government grant initiatives demand application fees , the time and effort required by already time-poor startups make the process more challenging.
Industry-specific startup hubs create growth
While many startup hubs simply support a regional focus, others offer communities tailored to certain industries or sectors. A recent example of this is the Queensland government’s Mining Equipment, Technology and Services (METS) Industry Growth Centre, which will foster business and export growth for companies working within these industries.
According to State Development Minister Dr Anthony Lynham, the initiative represents a $6 million commitment to encourage businesses to work in the sector.
“Having the centre here gives us access to millions of dollars of research and development funding to develop and commercialise ideas from our METS sector and in our universities,” he explained.
“This is about creating new business and export opportunities and jobs in an area where we already have a global reputation and international markets.”
While this particular initiative is about sustaining an existing industry rather than boosting an emerging disruptive one, it represents the value of industry-specific startup hubs to encourage investment in particular areas.