How Melbourne is driving the growth of AI startups

From being able to detect Covid-19 via chest scans to automatically identifying and mitigating instances of fraud, the impact of AI is growing significantly around the world.

With the global AI market expected to see total revenues reaching US$554.3 billion by 2024, it’s no wonder that governments are boosting investments into the sector.

Australia, for one, is doubling down on AI, having announced plans to invest around US$90 million into the industry. This will be used to support business growth, talent development, and innovation in the sector.

Photo credit: Invest Victoria

Within Australia, Melbourne is poised to lead this new age of AI, with plans to build up its investments and support for AI startups in the region.

Capital and talent

The Australian government has enacted numerous policies to support startups looking to enter the country, such as research and development tax incentives.

In Melbourne, the state government of Victoria has support programs for businesses looking to operate in the city, such as grants offered by Invest Victoria, the state’s investment attraction agency.

For AI startups, Melbourne offers two important resources: capital and talent.

According to Andrew Lai, CEO of Melbourne-based scaleup accelerator Boab AI, the city has seen a surge in AI investments over the last few years.

Andrew Lai, CEO of Boab AI / Photo credit: Boab AI

The Victorian government has set aside US$95 million to support AI startup development in the region. It has also provided US$1 million to Boab AI, which has invested in 11 AI scaleups to date with an aggregated value of over US$110 million. The accelerator is in the process of raising a new US$73 million fund, with plans to invest in over 32 AI scaleups over the next four years. The state has also seen VC firms taking a greater interest in the sector.

Capital aside, Melbourne is also home to a wide pool of talent specialized in AI. The University of Melbourne is the nation’s top university for computer science, and many of the city’s other educational institutions such as Monash University and the Royal Melbourne Institute of Technology have strong academic standings in the field. This creates opportunities for companies to partner with universities to connect with the right talent.

“Australia’s AI talent is second to none – it’s world class,” says Lai. “I often meet people from some of the big tech firms from Silicon Valley, and they’ve commended the quality of AI researchers and software engineers from Melbourne.”

Additionally, there is a big market potential for AI in Victoria. According to Lai, the Australian government is looking at ways to move away from traditional economic drivers toward new technologies that can boost productivity in the nation, which is where startups come into the picture.

“Australia seeks to gain an edge in the competitive landscape of economies around the world, and it understands that it really needs a technological edge, that it needs innovation, to do so,” he explains.

Not just for early-stage startups

While Melbourne’s startup ecosystem ranked 36th in Startup Genome’s 2021 list and saw US$529 million in early-stage funding that year, it is relatively young. This means that the ecosystem is still developing, especially in terms of support for later-stage firms.

To that end, the Victorian government recently injected US$59.8 million into the Victorian Startup Capital Fund, which aims to grow the region’s venture capital sector and help drive startup investments, especially into later-stage companies.

Melbourne has also seen a rise in startup support targeted at such businesses. Boab AI is one example – as a scaleup accelerator, it focuses on helping later-stage companies address key issues that may be holding them back from achieving further growth.

“Aside from funding support, we offer what we call direct assistance,” explains Lai. “It’s very much a hands-on program where we try to provide services to address the gaps of the companies, as opposed to early-stage accelerators, which are focused on the inception stage and offer mentorship and advice.”

Easing the path

Invest Victoria also provides resources for later-stage companies from outside the country looking to set up in Melbourne, connecting them with the relevant government authorities and ecosystem players in order to ease their entry into the region.

That was the case for Singapore-based AI medtech startup KroniKare, which set up its Melbourne office last year. Founded in 2017, the firm uses AI to monitor and assess chronic wounds, enabling medical professionals to focus on the more critical aspects of treatment.

According to KroniKare founder and CTO Hossein Nejati, the company made the decision to expand to Melbourne thanks to the potential it saw for medtech in Australia. From his perspective, the city is home to a world-class health sciences and healthcare industry, and it has a diverse pool of the relevant talent KroniKare needed to fuel its growth.

Hossein Nejati, CTO at KroniKare / Photo credit: KroniKare

With the support of Invest Victoria, the startup was able to navigate the process of setting up in Melbourne. The investment agency helped KroniKare foster its partnership with the Melbourne Connect Innovation Precinct, developed by the University of Melbourne, to collaborate in research, prototyping, and manufacturing. It also assisted KroniKare with reaching out to the relevant government agencies to facilitate the relocation of core team members into Melbourne amid the pandemic.

The startup also received guidance from healthtech and medtech advisors from the Victorian government on how to conduct clinical studies, navigate regulatory requirements, and collaborate with local players in the aged-care and telehealth sectors to test and deploy its solutions.

“This level of support is crucial for KroniKare to maneuver the Australia-New Zealand market while providing world-class products and services,” shares Nejati.

The road ahead

With the newly-launched National Artificial Intelligence Centre by the Commonwealth Scientific and Industrial Research Organisation or CSIRO, as well as a growing ecosystem of startup resources and support, Australia – and Melbourne in particular – is proving to be an attractive prospect for AI startups looking to expand their horizons, as the state continues to seek out exciting startups to help grow its ecosystem.

While the country has already laid the groundwork, there is still a lot to be done for the development of Australia’s AI industry. For Lai, the journey has only begun.

“We’re just at the very beginning of it and the opportunities are tremendous,” he says. “AI is horizontal, as opposed to vertical – it’s technology that can be used in any industry to make a difference.”

Invest Victoria is the Victorian Government’s investment attraction agency. It aims to support companies from Southeast Asia with their expansion plans into Melbourne and wider Victoria.

Learn more about the opportunities Melbourne and Victoria hold for your business at the Invest Victoria website.

This content was produced by Tech in Asia Studios, which connects brands with Asia’s tech community. Learn more about partnering with Tech in Asia Studios.