A commonly expressed view in Australia is that startups don’t create large numbers of jobs and therefore have limited impact on the broader economic prospects of the nation. Notwithstanding the evidence we’ve already identified suggesting this is untrue, this view also fails to take into account the fact that formation of startups is not an end- point in itself, but a necessary step in creating large, globally significant, sustainable companies that drive economic growth and prosperity, and create large numbers of high-value jobs. These companies are, by definition, startups in their early years. Some of the most valuable firms in the world were startups just a decade ago.
This misconception has arisen in Australia partly because we have very few examples of technology companies that have gone on to achieve substantial global growth and create large numbers of jobs. That perception may be gradually shifting as more successful Australian tech firms become part of our narrative.
Many emerging startups remain private companies for significant periods before listing. When Facebook listed on the NASDAQ in May 2012, it debuted at a market capitalisation of US$104 billion (about the same as the present-day valuation of Australia’s largest company, Commonwealth Bank). Yet even here, the value of high growth technology companies is evident - Facebook has since grown at a remarkable rate, boosting its market cap to around US$530 billion.
Mapping the existence of high-value, privately held companies can provide a strong indicator of a flourishing tech sector. Here, too, Australia is starting to improve, according to data from CB Insights (Figure 18). Over the last two years, Australia’s burgeoning ecosystem has begun to add high-value businesses to this list for the first time. In 2018 Canva joined the club, and in 2019 was joined by Airwallex and Judo Bank. A handful of other Australian tech firms are likely eligible, but haven’t had a valuation event. Over the next three years StartupAUS estimates 5-10 Australian companies are likely to be added to this list.