THE IMPORTANCE OF STARTUP & INNOVATION HUBS

Startup density is an important factor in growing successful startup ecosystems. Research by Richard Florida and others highlights the value of bringing entrepreneurs and people who support the startup ecosystem together. Density is achieved when startup founders and other participants in the ecosystem (investors, advisors, mentors, etc) work in close proximity and benefit from frequent ‘collisions’ which enable them to rapidly share information and build highly effective networks.

Startup co-working spaces and incubators are an effective means of artificially creating pockets of startup density. Increasing the scale of these enterprises, through precincts or large clusters dedicated to young technology firms, can amplify these benefits.

Ecosystems with density on a large scale receive significant windfalls from increased collisions and high value network effects. Silicon Valley is an example of where this has worked at the extreme end of the spectrum. Other examples include the startup clusters around Tech City and Plexal in London, Station F in Paris, and Silicon Allee in Berlin.

STARTUP HUBS AROUND THE WORLD

Cities with mature startup ecosystems are often characterised by having one major hub of startup activity. The MaRS Discovery District is a 140,000m2 innovation precinct in the centre of Toronto, and London’s Tech Nation is now home to around 5,000 startups as well as many larger tech companies. In June 2017 Paris opened the doors to Station F, a 34,000m2 startup campus. To get an idea of scale, the Director of Station F, Roxanne Varza, has described the space as ‘the size of the Eiffel Tower lying down’.

These cities are investing heavily in startup precincts because the benefits are increasingly difficult to ignore. Leading work from the Brookings Institution suggests innovation districts have become a key part of the new wave of city-based economic development by playing a number of important roles, including:

  • Helping cities align economic development with disruptive forces in the economy and leverage their distinct economic position
  • Empowering entrepreneurs as a key vehicle for economic growth and job creation
  • Creating better and more accessible jobs at a time of rising poverty and social inequality

STARTUP HUBS IN AUSTRALIA

Historically, Australia has lagged behind its peers in the development of global-scale startup hubs, and in recent years StartupAUS has recommended the creation of a national network of startup precincts. In the past two years, significant progress has been made on this front. Precincts in major Australian cities now include:

  • The Sydney Startup Hub (17,000m2)
  • Brisbane’s two startup hubs, The Precinct in Fortitude Valley and The Capital in Brisbane’s CBD (5,500m2 and 2,700m2 respectively)
  • Melbourne’s Victorian Innovation Hub at the Goods Shed North in Docklands (4,000m2)
  • Adelaide’s innovation precinct, Lot Fourteen (23,500m2)

These projects represent positive shifts towards growing density in Australia’s startup ecosystems. Nevertheless, there remains significant room for growth if Australian cities are to compete with the likes of Toronto, London, and Paris (let alone cities in the US).

SYDNEY: TECH CENTRAL

In August 2018 the NSW Government announced plans to explore building a massive tech precinct around Sydney’s Central station. The State Government has subsequently recommitted to this vision. An exploratory panel chaired by David Thodey recommended a series of goals and a vision for the precinct in its report, all of which were adopted by the Berejiklian Government. That vision outlines a 250,000m2 precinct dedicated to innovation and technology, with 50,000m2 set aside as affordable space for startups and early stage companies. Atlassian has announced it will look to establish its new headquarters in the precinct as the first anchor tenant.

Alongside the Thodey panel report, Transport for NSW has put forward a draft strategic vision for the precinct.

The project is still in its infancy, but if it comes together in the shape currently envisaged it could be a monumental shift forward for Sydney’s tech sector. The scope and vision of the precinct is vast, and would help stake Sydney’s claim as a global tech centre. The building blocks for a highly successful precinct are present: excellent access to transport (Central is the city’s main transport hub), close proximity to high quality research institutions (UTS and Sydney University), and buy-in from both established tech firms conducting real R&D as well as emerging high-growth companies. The success of the Sydney Startup Hub helps support the idea that a bigger precinct play at Central could work, too.

SYDNEY'S TECH CENTRAL
precincts

OTHER PRECINCT PROJECTS

Further private efforts are also underway. In Victoria, Melbourne University is developing Melbourne Connect, a sizable innovation precinct in the inner-city suburb of Carlton. In Sydney, further work continues at the Australian Technology Park, with Mirvac’s South Eveleigh project looking to develop a tech precinct likely to eventually complement and extend the Tech Central precinct.

There is more work that can usefully be done in continuing to expand and connect these precincts, both within cities and inter- state. Forward planning is required to cater for rapid expansion in demand for space, and strong national coordination will help drive performance and impact. Provisioning urban startup hubs to support regional ecosystems will also help boost and diversify economic returns.

GROWING DEMAND FOR SPACE

Part of the reason for the development of so many new, sizable startup hubs across Australia has been the rapid growth in the demand for startup accommodation. The expansion of established coworking spaces in Brisbane, Sydney, and Melbourne has occured at the same time as WeWork, a global leader in coworking space, has entered the Australian market. In Sydney, WeWork has rapidly opened 10 new locations in and around Sydney’s CBD, in close proximity to the Sydney Startup Hub. Nevertheless, thanks to strong demand for ever more space of this kind, the Sydney Startup Hub has consistently had occupancy rates over 90%.

This trend can in part be attributed to a change in the way people are working across the economy as a whole. A global shift towards independent work and freelancing has driven up demand for convenient, small-scale office space. But with coworking seats in major Australian cities growing by thousands of places each year, freelancing can’t take all (or even most) of the credit.

 

Organisations like Stone & Chalk, which only accepts members building genuine startups, have grown swiftly. Stone & Chalk expanded dramatically into two dedicated floors of the Sydney Startup Hub in 2018, while at the same time boosting its presence in Melbourne and moving into Goods Shed North. In 2019 it expanded further, opening in Lot Fourteen in Adelaide. Fishburners, which also only accepts tech startups, doubled capacity in its Brisbane space at the Capital in 2018, while in the same year quadrupling the size of its Sydney presence as it moved into the Sydney Startup Hub.

Given the difficulty in collecting reliable, comprehensive data on startup formation rates, demand for coworking space is a reasonable proxy. On that metric, the system remains very healthy indeed.

lot fourteen

South Australia has developed an ambitious, large-scale innovation precinct in Adelaide’s CBD, Lot Fourteen. Lot Fourteen is a large site primarily dedicated to fostering the growth of innovation and startups which has been progressively coming online since late 2018. It houses coworking spaces, scale-up offices, partnerships with national and multinational industrial firms, and dedicated R&D facilities. Australia’s national space agency is also headquartered at Lot Fourteen.

At over 23,500m2 Lot Fourteen is a significant addition to the national landscape, and has additional room to grow if demand warrants. The precinct is part of a concerted push by the South Australian government to develop sectoral strengths in high-value emerging technology areas.

lot14
StationF
stationf

In 2017 Paris opened one of the most ambitious startup hubs in the world - Station F.

Station F is in the 13th arrondissement, in the middle of Paris. It is built inside a former rail freight depot, which is where it gets its name. It is an enormous space - 34,000 m2, which has been converted into a workspace for up to 1,000 startups making it the biggest startup campus in the world. French President Emmanuel Macron formally opened the space in June 2017 as part of his vision of making France a world leader in technology.

Station F hosts 31 startup programs and corporate partners, including Facebook’s first startup incubator, Startup Garage. The program supports 15 data-driven startups on a six-month cycle.

Xavier Niel, a French billionaire who invested €250m into the project, was one of the primary drivers for the Station F project. In 2013 he set out to create an emblematic incubator to bring the French startup ecosystem together, similar to a university campus with various programs for startups, event spaces, and services.

‘Our goal with Station F is not only to create the largest startup campus in the world but also to create a space that houses an entire startup ecosystem under one roof,’ explains Station F Director Roxanne Varza. ‘It’s a truly ambitious project that puts France and Europe at the forefront of the international startup map.’

Station F also wants to make entrepreneurship more accessible, with more international representation, female founders, and access to necessary resources for those from underprivileged backgrounds. In the Station F Founders Program, 40% of startups are female-founded. Successes include Euveka, a startup on Station F’s luxury tech program run with LVMH. Founder Audrey- Laure Bergenthal builds connected robot mannequins that alter size to help design clothes. Station F has also launched the Fighters Program for entrepreneurs from underprivileged backgrounds. The program offers access to the same resources as a standard Founders Program, but free for a year.

Contributing to the campus atmosphere, Station F is taking a dive into residential accommodation. A 10-minute bike ride away from the ‘main campus,’ the co-living space will house 600 entrepreneurs who want to live and work together. In the future, Station F hopes to open a five-star hotel and youth hostel to continue expanding the ecosystem’s accessibility to international profiles.