Sydney vs Melbourne for Starting a Startup
Synopsis
Sydney leads Australia’s startup ecosystem in funding, investors and overall ecosystem value, while Melbourne offers lower costs and strong opportunities in healthtech, research, AI and enterprise software. Here’s how the two cities compare.
Australia has two strong choices for founders. Which is the best option will depend on what the startup needs most: investors, doors to industry, talent in research or low operating costs, better yet if it has access to a good founder community.
Sydney remains ahead across Australia according to the most recent figures. Both Sydney (25th globally, 1st Oceania) and Melbourne (32nd globally, 2nd Oceania) score respectable but not overwhelming results in the Global Startup Ecosystem Report. Of note of interest Melbourne is placed relatively closer to Sydney than it was in the last year. Melbourne’s ecosystem value is US$24 billion, compared with US$59.7 billion in Sydney. Sydney also saw more venture capital funds in total from 2021 to 2025 than Melbourne, at US$ 12 billion vs. US$7 billion.
But Melbourne is narrowing some of the gap. Victoria reclaimed its top position in 2025 for startup investment, raising A$2.4 billion according to LaunchVic, surpassing New South Wales for the first time. Overall this makes the startup ecosystem comparison between Sydney & Melbourne much less one-sided than it was several years ago.
The Startup Ecosystem in Sydney is Stronger
The most obvious advantage is in favouring Sydney when the primary objective is company building with significant capital, extensive networks and access to global investors. Sydney is ranked first in funding, performance, talent and experience for Oceania by the Startup Genome.
There is also a high density of technology firms, investors and research institutions in the city. In one part of the city, Tech Central brings together startups, scaleups, leading technology companies and universities and research institutions. According to the NSW Government, it is home to Australia’s highest concentration of technology businesses and venture capital density.
As a founder, this matters because fundraising is almost never about getting one investor. It is easier to meet potential investors, employees, customers and partners with a larger investor and business community. Sydney is also Australia’s financial centre, which gives founders direct access to banks, fund managers and other financial institutions.
Melbourne Is Catching Up Quickly
Melbourne overall has a smaller ecosystem, but this is growing at pace. According to the 2026 report by Startup Genome Melbourne comes in at 30th global rank with a US$24 billion ecosystem value and US$7 billion of cumulative VC funding between 2021 − 2025.
The bigger shift is in the wider startup ecosystem of Victoria. In 2025, startups in Victoria raised A$2.4 billion according to LaunchVic. That led to Victoria surpassing New South Wales for total venture capital raised year-to-date. But this was somewhat assisted by a couple of significant deals in the later stage, with seed and early-stage being hesitant.
This is an important distinction for a new founder. This allows a city to draw significant investment into mature ventures without needing to fund a company in its conceptual or nascent phase as well. Melbourne is working to solve this via new seed investors, accelerators and government-backed funds.
Is Sydney Startup Funding Better Than Melbourne?
Overall, Sydney still has the more buoyant funding base. However, according to the latest numbers put out by Startup Genome, Sydney received US$1.3 billion in seed and Series A funding compared with just US$275 million for Melbourne by grants.
This is particularly obvious for startups that need to raise big rounds or are integrating with financial institutions where Sydney has the advantage. NSW accounts for 64% of Australia’s fintechs and attracted 65% of national fintech capital raised in 2024, according to NSW. Sydney has hosted major banks, fund managers and financial regulators.
But Melbourne has become a much trickier opponent. The funding outcome from Victoria for 2025 demonstrates that many investors are open to investing large sums of capital into Melbourne companies but want the company to be scalable as a business. It also contains programs more oriented towards bringing new early-stage investors into the ecosystem. Few of the new funds are backed with a total of over A$275 million in early-stage capital for seed and Series A startups, LaunchVic says.
The practical answer to this question is a simple one for the founder: Sydney offers you the deeper funding pool now, but Melbourne has a faster growth rate in some parts of the market.
The Natural Home for Fintech is Sydney
Sydney is clearly the winner for the fintech founders. According to Investment NSW, at least 60% of all Australian fintech startups are located in Sydney, and the city is home to 80% of foreign banks operating in Australia as well as most of the country’s financial services regulators.
The city has already spawned major fintechs such as Afterpay, Zip and Athena Home Loans. This gives newer founders access to an existing network of financial services organisations, personnel and potential customers. Sydney hence becomes a very desirable hub for payment tech, financial software lending, banking technology, etc startups.
Beyond fintech, Sydney has a lot to offer. Its key technology sectors also include artificial intelligence, quantum technology, cybersecurity and health and life sciences and creative technology. Tech Central is bringing together plenty of companies that work on all of these.
Healthtech and research are stronger sectors in Melbourne
HealthTech, MedTech and life sciences, Melbourne has a very strong position, Victoria is home to over 40% of Australia’s listed healthtech companies and the state’s health technology sector employs over 51,000 people as well as around 20,000 research-sector jobs, according to Victoria.
About 18%-20% of Victorian startups work in healthtech, according to LaunchVic, as Melbourne’s biomedical sector benefits from a basis in the city’s universities, hospitals and research institutions and specialist programs. The city is already home to companies including Culture Amp, Airwallex, PolyNovo, Mesoblast and Telix.
Industry-wise, Melbourne is getting stronger in the fields of AI, enterprise software, fintech and deep technology. Invest Victoria told ASIC that more than half of Australia’s enterprise software and healthtech startups are in Victoria.
This is why Melbourne is an excellent choice for founders whose industries rely on research, specialist talent or university and healthcare organisations.
Best Startup Incubator Programs in City-wise
If you were to compare the cities across every stage there typically isn’t one clear loser, both areas have specific programs set up for founders. In Sydney, they have Tech Central as well as UTS Startups, Cicada Innovations, the Sydney Knowledge Hub and other organisations in place to support some founders. Coworking space and offices for businesses at different stages at the Tech Central Innovation Hub.
Melbourne, too, has a supportive ecosystem, especially when it comes to specialist startups. The Victorian Government, through LaunchVic, funded over A$5.1 million in 2025 to help early-stage startups. The programs that received funding were ANDHealth, the Melbourne Accelerator Program, MedTech Actuator, Startmate and Startupbootcamp.
Melbourne’s specialist programs can therefore be particularly valuable for founders working in health, deep technology or research-led businesses. For a general tech business wanting to play amongst thick networks of investors and corporates, Sydney’s Tech Central is super competitive.
Melbourne Is Cheaper for Founders
One area where Melbourne has a clear leg-up is, of course, cost. It has cheaper housing, but considerably lower-priced office space than in Sydney as well.
Domain found that in December 2025, Sydney’s median weekly house rent would be A$800 and its median unit rental would be A$750. Houses and units in Melbourne were more than A$580 each.
This can also be seen in the office costs. When an early-stage company is scrambling to increase its runway, this distinction can be everything. Melbourne, with its lower costs of living and space to work, may keep a founder without an urgency for the Sydney financial capital or strong investor network.
Is The Sydney And Melbourne Balance Tilted?
Yes. Although Sydney remains the stronger ecosystem, this is no longer a straightforward comparison as traditional comparisons suggest that the gap is closing rapidly.
Aelean’s Startup Genome numbers show Sydney winning in overall ecosystem value, total VC funding, early-stage and global ranking. Sydney remains 26th in the global rankings, while Melbourne is placed 32nd.
Melbourne is posting huge growth at the same time. Melbourne's startup sector secured A$2.4 billion+ in 2025, the third-highest startup creation rate on and more than 68k now work in Victorian startups. Victoria’s Growing Startup Sector (LaunchVic) More generally Victoria was bolstered by strong growth in AI, health, fintech and deep technology across Melbourne.
That means founders should not believe in stale rankings that automatically classify Sydney as the only place to look for solutions. Melbourne is now a much stronger contender, particularly amongst specialist and research-led firms.
Starting a Startup: Sydney vs Melbourne
For most founders seeking the biggest access to investors, monetary institutions, giant technology groups and international enterprise networks Sydney is a better fit. It has a bigger ecosystem, more cumulative VC funding and better positioning in Fintech and numerous other tech spaces as well.
Melbourne is often the better option for founders seeking lower costs and tight connections to universities, research and specialist industries. It is seeing growth in its healthtech, life sciences, enterprise software as well as AI and fintech sectors, all this while startup funding hit a record A$2.4 billion in 2025.
The answer, it turns out is much more complicated, and it's not just Sydney or Melbourne for the best city to start a startup in Australia. Sydney has the upper hand when it comes to capital and scale. Melbourne is a more refreshing choice for cost-effective and research-oriented sectors. The best bet is the city that fits with the startup industry, funding requirements and growth stage and not just reputation.
At Inspirepreneurs Magazine, covering entrepreneurship, business failures, and the human stories behind the world's most ambitious founders. She writes at the intersection of strategy and storytelling.
