Australia's two biggest cities carry nation's startup dreams

Sydney has been crowned Australia's startup capital by a new report compiled by stakeholders from the country's biggest city.

In a points decision that's bound to agitate its "Mexican" neighbours, a survey of 1,000 Australian startups has nominated the New South Wales capital of Sydney as the biggest centre of activity. Start-up Genome quizzed over 50,000 companies around the world for the Global Entrepreneurship Monitor (GEM).

Sydney is 1.5 times bigger than Melbourne, six times larger than Brisbane, and eight times larger than Perth, according to the report.

Much like the Western Australia-driven mining boom, Australia's two most populous cities are carrying the rest of the country.

"Adelaide, Hobart, and Canberra cannot yet be considered as startup ecosystems, as they don't show the requisite startup activity," the report said.

Sydney was ranked number 12 in the world and Melbourne 18th, both significantly trailing the top three: Silicon Valley, Tel Aviv, and Los Angeles. The Australian survey was conducted with Surry Hills incubator Pollenizer and Deloitte Digital, which found that the number of Australian entrepreneurs per capita is second only to the US in the countries covered in the GEM.

Sydney shouldn't get too ahead of itself, though. It is still dwarfed by the world's startup headquarters, Silicon Valley, which is 6.7 times larger, while New York City is 2.6 times larger.

The new report also re-enforces the stereotype that women are scared off by the male-dominated game of entrepreneurship.

Less than 4.3 percent of Australian startups were founded by women — worse than the low participation rates experienced in the IT industry.

The report accused Australian companies of lacking ambition and targeting smaller markets. Australia reportedly has predominately "integrator"-style businesses, B2Bs that sell specific consumer products into a guaranteed market.

The report said that Silicon Valley early stage startups raise 100 times more investment funds than their Sydney counterparts.

Locally, only 39 percent of startups apply for grants — and almost 80 percent apply for the lucrative R&D tax concession — which demonstrates that there is more room for companies to cash in on the grants and rebates on offer.