Despite the relatively small size of Western Australia’s tech market, many locally founded startups are choosing to scale their businesses from the state, as the local innovation ecosystem continues to grow.
The state government began keeping a public record of the innovation ecosystem in September 2022, finding that there were 727 active startups in the state. It also reported that Western Australia-based startups raised had raised $245 million, nearly tripled what they had in 2020.
During this period, the state has launched a 10-year innovation strategy, committed $25.8 million support innovation through the second edition of the New Industries Fund, and has attracted expanding venture capital (VC) interest, including through one of the first state-focused VC funds Purpose Ventures, which raised $45 million this year.
Startups looking to scale globally were invited to share their experiences on ‘scaling from Western Australia’ during a panel session at West Tech Fest last week.
Money Catcha founder and chief executive Ruth Hatherley described her experience as “a story of pre-COVID vs post-COVID” and says that the state is now home to a “rich startup community”.
Establishing the business in 2017, Ms Hatherley “found it quite lonely founding a company in WA”. She outsourced product development, was unable to raise capital from local investors, and said state government grant funding processes were “really challenging”.
To reach potential customers and participate in startup accelerator programs she ended up travelling to the East Coast once a month.
“For me, post-COVID, the whole environment as a startup company in terms of funding support, resource support and capabilities, and then also the ecosystem itself. I would say it is in complete contrast to the experience I had when I started in 2017,” Ms Hatherely said.
While most of Money Catcha’s customers still come from out of the state, the increasingly supportive environment has meant she now bases most of her team in Western Australia. Working with a local corporate advisory firm during its last funding round, Ms Hatherley said the business was now able to attract a lot of WA-based capital.
The co-founder and chief executive of MedTech firm Neurotologix Kate Lewkoski began her startup’s journey in 2018, and was “annoyed” by advice she received against manufacturing her company’s product locally.
She acknowledged that while the state has a “bit of a medical manufacturing industry”, there is no “contract medical manufacturer, ” meaning WA was unable to make respirators during COVID-19 “even if we tried”.
Ms Lewkoski highlighted the talent among local software development and engineering firms that are able leverage their experience in remote operations and internet-of-things technologies given they also service the local mining industry.
Engineers working with Neurotologix are now “actually starting that company, they’re actually becoming certified so they can do my first runs. I weighed it up… and if anyone tries to say ‘look, you can’t do this’, it’s often [that] they’ve got some bias,” Ms Lewkoski said.
This attitude made her question ‘why not?’, flagging that for Neurotologix product concerns regarding labour and supply chains did not apply. “We have what we call a box build, it’s not labour intensive, it’s mainly circuit boards and plastics”.
Ms Lewkoski also noted the “many positives of building” Neurotologix’s products and developing the associated software in WA.
“The engineers that developed it can oversee the line, I don’t lose my intellectual property, and… I can control the quality. Eventually when we get big enough, we may move manufacturing, but at the moment there’s no disadvantage,” Ms Lewkoski said
“In terms of the digital health… Perth is the best place for digital health because we are in the [same] timezone of 40 per cent of the world. Sydney and Melbourne do not have that advantage.
“We can support Asia during nine to five. We can do all of that from Perth. And if we have somebody on, for example, the east coast of America, we can support the world.”
However, she did note that the company was fortunate to receive seed funding from a “large European multinational” which has enabled her to focus solely on developing her product and access other benefits, such as being able to have lunch with the chief executive to seek advice.
FinTech firm One Click Life’s co-founder and chief technology officer Nathan Kerr, who’s startup journey began in 2015, recounted a similar experience of facing a Western Australian innovation and VC system that “was probably not as mature back then”. As such, the business had to find support in the rest of the country.
Through its digital identity verification solution One Click Verify is partnered with the Australian Taxation Office and the federal Attorney General’s Department, which then caught the interest of people in the financial sector. Mr Kerr says the business’ “scale came to us by accident” as the firm “lucked out” with its customers
Mr Kerr encouraged startups to speak to relevant government ministers at the state and federal level, arguing that “depending on what product you have, they’ll be looking for a media grab”.
“If it’s the right time and there’s something in Parliament [for example] like digital ID, they’ll have have a conversation with you straight away, and then they’ll accelerate you as well.”
However with regards to governments grants, Ms Lewkoski said she found it very difficult to win any until she started applying for and winning industry awards.
After this, she said she received all the grants Neurotologix applied for. Ms Hatherley similalry noted that winning industry awards was “a necessary part of the process of scaling” as it builds profile for the company and “enables you to have conversations with people that previously wouldn’t let you in their door”.
At the start of the day, Western Australia’s Minister for Innovation and Digital Economy concluded his address to West Tech Fest attendees by expressing “the immense pleasure of witnessing the extraordinary enthusiasm among the innovation community in WA, but also the hunger to do more”.
“As a government and as a minister, I’m committed to continue to listen to our various stakeholders to you in this room to make sure that I can do my best to keep growing this amazing ecosystem that we have got in Western Australia,” Mr Dawson said.
Brandon How’s travel to West Tech Fest 2023 in Perth was subsidised by the event organisers, including Curtin University and the WA government.
