Fintech innovation hub Stone & Chalk has taken up residence in Melbourne’s new Victorian Innovation Hub, bridging its Sydney and Melbourne operations, and chief executive Alex Scandurra says it’s uniting the two cities against common adversaries: Singapore and Silicon Valley.
Spreading Stone & Chalk’s capabilities between two major Australian startup hubs is intended to cement the eastern seaboard as a hub for fintech within the whole Asia Pacific region.
Backed by the Victorian government, the new hub is also the new home of LaunchVic, CSIRO’s Data61, That Startup Show, Startmate, Stone & Chalk partner SproutX, and The Medtech Actuator. It is located in the Goods Shed North in Melbourne’s Docklands precinct.
For Stone & Chalk, the move represents the “first time we’ve started to see a national capability and assets starting to form, helping startups commercialise and scale”, Scandurra tells StartupSmart.
Some 80% of all Australia’s startups are based in either Sydney or Melbourne, and Scandurra says a bit of friendly rivalry can be healthy, but not if it’s detrimental to Australian startups as a whole.
“It’s fun to try and outdo one another, but not at each other’s expense,” he says.
Furthering the startup ecosystem should be part of a national agenda, and “a core part of what we’re doing is trying to bring Sydney and Melbourne together”, he adds.
This combined front is part of a bid for the Australian fintech sector to “win the regional race”, says Scandurra, with cities joining forces against other global startup hubs, specifically, those in California and Singapore.
While the Australian tech and startup space is clearly younger and less developed than Silicon Valley’s, Scandurra says there has historically been a “brain drain” of Australian entrepreneurs heading to California because there wasn’t the right ecosystem to support them at home.
It’s “fantastic that that’s now starting to change,” he says, and the Victorian Innovation Hub is a part of that, but “corporate culture here still needs to move”.
Singapore, on the other hand, is Australia’s “key competitor” in the Asia Pacific region in the fintech startup scene, partly because of its sophistication in financial services, but also because the government there is putting significant funding into startup programs and accelerators.
According to Scandurra, around 60% to 80% of startups in those Singaporean programs are from overseas.
“They don’t really have that pipeline of talent that’s looking to start startups,” he says.
“It hasn’t been a core part of their DNA.”
However, startups lead to jobs and wealth creation, and so Singapore’s government is striving to attract them, Scandurra says.
However, he believes any startup starting out in Singapore is “already at a disadvantage because you have no real domestic market”; from the beginning, a startup has to be “building a business for a market that’s not [its] own”.
In Australia, on the other hand, there’s a “big enough market to commercialise and scale, to the point where you’re able to have a higher degree of success internationally”, says Scandurra.
A big part of what Stone & Chalk does is around “ensuring Australian startups are export-ready”, he says.
However, Australia is also “becoming attractive for high-quality startups” expanding here from abroad. Already, Scandurra has seen this in action, with Ripple setting up its Asian headquarters at Stone & Chalk in Australia.
This kind of movement is good from a signalling perspective, putting the Australian startup ecosystem on the map. But it also means the subsequent jobs and wealth creation come to Australia, not anywhere else.
While the new Innovation Hub in Melbourne has received funding from the Victorian government, Scandurra says there’s still more to be done to bring the startup scene into the public, and political, eye.
There’s still not necessarily an appreciation that “the jobs of the future are going to come from these startups,” he says.
“The problem we have is that politicians themselves don’t quite yet understand what we’re faced with.”
Australia has “amazing natural resources, amazing people and talent,” he adds.
“All they need is great awareness and good leadership.”