It’s been over four months since we both moved from Seattle back to Australia to start working full-time on rome2rio. With our inaugural blog post we’ve decided to reflect on those first few months, and what it has been like to found a tech startup in Melbourne. It’s been a fun ride so far. We’ve discovered a small but thriving community of startups, investors, web developers and other entrepreneurs. They have helped us along the way with invaluable advice and the feeling that we’re certainly not alone in our journey.

But let’s start with the downsides. Perhaps top of the list is the relative lack of local funding. Without doubt there are plenty of investors in Australia. Groups like Melbourne Angels, Mooroolbark Group and Aurelius Digital Angel Dinners in Melbourne or Angel Loft in Sydney provide early stage funding, and there are a few VC firms in Melbourne. However successful local tech companies still tend to look overseas for funding, often by creating a US parent company and seeking investments in the San Francisco/Bay area. This appears commonly motivated by access to more capital, better valuations, and a greater pool of investment expertise (investors that understand your business are more likely to want to invest in it). Local investors will often follow the lead of their US counterparts, so if you can obtain US funding then this stamp of approval can help you get local funding from investors who may not have as deep an understanding of your business’s potential.

There are a lot fewer startups coming out of Australia than the US, so naturally the community is a lot smaller. There is no Y-Combinator or TechStars funding and mentoring program in Melbourne to help you get started. A similar program called Startmate recently started up in Sydney, but it’s still small, with only five successful applicants in the first round.

But there’s still a fair bit going on, especially in the travel technology area. Adioso is a Melbourne-based and Y-Combinator funded travel startup that has been going for a couple of years now. They’ve built some innovative technology for searching flight airfares, raised over $300K in local and US funding, and built a solid user base. Travellerspoint and Travellr are two other interesting local travel companies. Webjet was founded in Melbourne and has grown to become the number one travel site in Australia, with plans to push into overseas markets. Melbourne is also the home of Lonely Planet. Wotif is another highly successful travel company that started up in Australia.

In fact, Melbourne (and Australia) has become a hub for travel startups. It’s not surprising really, given that Australians are renowned for their love of travel, especially independent travel. They are major consumers of technologies that help them explore the world. Other exciting start-ups we’ve come across include trunk.ly (a recently launched social media link aggregator that’s received plenty of press) and Culture Amp who are building Human Resources tools. There’s also the awesome web development group at inspire9 who have a drop-in desk system, plus loads of other folks doing interesting stuff we don’t have the space to mention here.

One great aspect of start-up life in Melbourne is the number of technology and entrepreneur events going on regularly. It’s a great chance for us to get out of the office, probably twice a week on average, and meet up with like-minded developers. Some of our favourite events are:

• Melbourne Jelly: a casual co-working get together run every fortnight. A group of 10 to 20 folks, most who usually work from home, get together at somebody’s office, house or cafe and work together for the day.
• Melbourne Travel Tribe: run by adioso [edit: and travellerspoint, thanks KK for the correction], this is a get together for travelers and people in the travel industry. We’ve met people working on travel sites and search engines, lonely planet guidebook writers, and travel bloggers.
• The Hive: describes itself as networking for entrepreneurs. Each month about 40 to 60 folks get together at a bar to chat and network. There’s a guest speaker with some experience, such as Nathan from Inspire9, Robin from Blurb or Tony Wheeler from Lonely Planet who chat and answer questions about their experiences for about an hour. Good stuff.
• Churchill Club: a more experienced crowd than The Hive. At this gathering you’re more likely to meet board members and investors of tech companies than young founders. Unlike all the other events it costs money to attend, usually about $40 – $50. Typically three guest speakers will talk about a topic such as Venture Capital : What’s Hot or How to successfully make deals. Less relaxed, but certainly worthwhile.
• Ignite Melbourne: twice a year, this gathering sees a group of 10 – 15 presenters each give a 5 minute presentation. The slides change every 15 seconds and speaker can’t slow down. Fast and fun. The topics range wildly from anti-bacon eating to developing a fart app for the iPhone to one speaker’s experience with filing for and defending patents.
• UnConvention: A Sydney group called the Entourage ran this massive event that has less of a technology skew, but saw some big names chatting about starting a business. Listening to these guys speak made us glad we’re in tech and not, say, real estate or retail where scaling your business is more difficult and costly.
• DataMelb, MelbJS: A couple of monthly technology focused meetings where speakers chat about gathering, managing and visualizing data (DataMelb) and everything related to Javascript (MelbJS).

So all up, Melbourne doesn’t seem such a bad place to launch a startup. Quality of life here is pretty good at the moment; Australia has avoided the financial troubles of the US and Europe largely due to a 20-year long mining boom. There is also access to decent, (mostly) free public health care, which is one major advantage over launching a startup in the states.

Funding is less readily available, so a trip to the US after we launch to raise funds is on the agenda. Limited access to the startup culture of the valley will also make marketing more difficult, and has certainl
y made the task of connecting with other companies to make deals or start partnerships more challenging. On the flip side, it’s nice to be outside the competitive, and sometimes group-think flow of the valley. It’s a shame that Melbourne is so far from the rest of the world. But hey, we are rome2rio and we love to travel!