Why are there so many more start-ups in Sydney than Melbourne?

Although meccas in their own right, Melbourne and Sydney lead Australia’s start-up climate. With Adelaide, Brisbane and Perth trailing far behind, these two cities lead the way for business start-ups in the nation.

So, why are there so many more start-ups in Sydney than in Melbourne?

First of all, the Sydney start-up climate has changed substantially during Covid and has leapfrogged Melbourne into the number one city for business start-ups within the last two years.

Boasting a diverse economy and a relatively stable, low-risk business environment, Sydney start-ups are supported by world-leading financial and legal systems.

And although both cities are flooded with talent and produce an abundance of opportunities, Sydney’s location, stature and size are just a few reasons why Sydney is a great launching pad for every success in your company’s future.

Choosing Sydney Or Melbourne For Business?

A 120-year-old question that has plagued Sydney-siders and Melburnians alike, the answer to the question is never simple.

However, Sydney has been at the forefront within the last few years on this particular topic.

Although Melbourne has created and nurtured many businesses, Sydney offers more help for business owners, promoting many a Sydney start-up by providing aid for independent grassroots organisations.

Several businesses such as Fishburners, Icentral and TyroFinTechHub are all located within Sydney and pride themselves on offering a community for Sydney start-ups.

Sydney also boasts self-starter success stories with Atlassian, Freelancer, Canva, DesignCrown, Stockpot and Invoice2go, all hailing from Australia’s largest city.

Silicon Valley giants Google, Facebook and Twitter are all opting to build their Asia-Pacific head offices in the harbour city in the near future.

The stature of the internationally visible city means Melbourne sometimes, is initially passed over by giant multinationals. In turn, small businesses and start-ups are better positioned in a city with such large corporations.

How Many Start-Ups are in Sydney Compared To Melbourne?

With roughly 17,000 start-ups nationally as of 2021, and a start-up ecosystem between the two cities worth a combined $34 billion, both cities are on the rise with no signs of slowing down.

Both cities largely contribute to the estimated US$3.8 trillion with a combined worth of $34.5 billion.

However, while Melbourne contributed roughly $10.5 billion, Sydney contributed an estimated $24 billion, respectively, according to the Global Start-up Ecosystem Report (GSER) by Start-up Genome.

Sydney’s Resurrection

It is a known fact that Melbourne has led the way for tech companies to set up shop within the Asia-Pacific region.

With giants such as Seek, MYOB and Slack calling Melbourne home within the region, the emerald city’s fintech industry has not been able to compete with the likes of Melbourne until recently.

Although rising – 475% over four years, to be exact – Melbourne’s ecosystem is steadily on the up. Likewise, Sydney’s ecosystem is also steadily rising alongside Melbourne’s healthy fintech start-ups.

Still, the emerald city boasts the likes of vastly various start-ups in Sydney that branch out further than fintech.

But money isn’t everything, and it most certainly is not the only indicator of a successful business. The start-up ecosystem rankings look at five key criteria for each city and their relevant start-ups.

Performance, funding, connectedness, market reach, talent and knowledge are the five key criteria points for which each city is assessed.

Melbourne faired much worse than their interstate rivals on a marking scale of 1 to 10 – 10, being the highest.

Melbourne scored poorly, attaining the following scores: performance 1, funding 1, connectedness 4, market reach 2, talent 2, and knowledge 1.

On the other hand, Sydney climbed up the rankings by racking up scores such as performance 4, funding 4, connectedness 8, market reach 5, talent 4, and knowledge 1.

Though the likes of Silicon Valley and New York being out of the reach for both cities for quite some time, the results are promising and begin to paint a picture of the ever-growing contrast between the two modern cities.

Sydney’s Start-Up Evolution

With an influx of ABN registrations over the last two years, it would seem that every second person has a side hustle nowadays.

A global pandemic and several lockdowns have allowed the economy to flourish in some sectors while failing in others.

Sydney start-ups have seen a resurrection since 2020 and are ever-evolving in a world focused on cryptocurrency and NFTs.

Sydney based NFT company, Immutable is one of the recent success stories coming out of the emerald city and cementing a place in Sydney’s start-up community.

The acquisition of $200 million in funding in a Series C funding round was spearheaded by Singapore’s state-owned investment firm, Temasek.

Subsequently joining an ever-growing roster of cryptocurrency ‘unicorns’ with a valuation dearer than US$1 billion.

With success stories such as Immutable coming out of Sydney, the already large community for Sydney start-ups is ever-growing and ever-evolving as Sydney begins to cement itself in the world of successful tech start-ups.

Unspoken Reasons Why Start-Ups In Sydney Flourish

There are several other factors to consider when thinking about Sydney start-ups and why they’re often succeeding over their Melbourne counterparts…

International Brands

Australia’s and, more importantly, Sydney’s insatiable appetite for all things retail has not gone unnoticed by international giants either.

Companies such as Gucci, Kering, Dolce and Gabbana, Audi and Tesla are all expressing interest in retail spaces within Sydney, capitalising on the city’s growing momentum.

Top retailers such as Sephora, Cartier and Omega opened stores in Sydney last year, cementing Sydney’s stance within the retail world.

Fintech start-ups in Sydney have also seen a rise due to the accessibility to the Asia-Pacific region. Thus, making Sydney a perfect location for international growth and presence within the region.


Although named one of the most expensive cities to live in, Sydney’s oversupply of units in the pockets around Sydney has seen a rent fall.

To help offset the rental costs, a declining AUD and a rising USD have contributed to a 10% reduction in the cost of conducting business within Australia.

Lifestyle & Diversity

Being Australia’s largest and most populated city, there is an inevitability of welcoming a diverse group of people – all able to bring a diverse range of skills and cultures.

With over 5 million people residing in the city, Sydney star-ups are bound to reap the benefits of such a large pool of diversity.

Other drawing cards are the city’s culture that focuses on beaches, sun, sports, and arts, all contributing to a healthy lifestyle, which equates to a happy working life.

Where Do Sydney & Melbourne Sit in the Global Start-up Ecosystem?

With only two cities representing Australia within the top 50, start-ups in Sydney bested Melbourne by a landslide, with Sydney coming in at #24 and Melbourne tied with Bern-Geneva, Dublin and Delhi at #36.

Why is Australia a Good Destination For Start-Ups?

Australia is a well-known open market with minimal restrictions, deeming the import of goods and services less restrictive than neighbouring countries.

Our highly educated workforce is also another contributor to success, along with the diverse natural resources, which attract high investments from foreign investors.

How Many Start-ups are Created in Australia Each Year?

As records show, the slow rise of start-up companies plateaued at around the 733,000 mark for several years since 2014.

2019 brought on a massive influx of new companies, with a record 370,000 companies digging their heels and setting up new companies.

Covid did make a dent in 2020 as the numbers dropped to 344,000, but the figures look set to rise at the conclusion of the 2021-22 financial year.

What Industry Has The Most Start-ups in Sydney?

Like Melbourne, fintech is the leading industry within start-ups in Sydney. Moreover, banking and fintech industries flourish within the emerald city.

At Valles Accountants, we offer over thirty-five years of experience and are one of Sydney’s most reputable premium tax accountants. If you need a reputable tax accountant in Sydney for your startup , contact Valles today.