Beyond Start-Ups: The Three Strata of Australian Innovation
Australia’s innovation conversation is still too narrow.
We celebrate start-ups. We run pitch nights. We talk about founders, venture capital, and disruption. We treat innovation as if it is primarily the domain of new entrants.
That is only the most visible part of the system—not the largest, and not necessarily the most consequential.
A serious innovation ecosystem is not made up of start-ups alone. It has three strata:
start-ups that create new options,
scale-ups that turn those options into growth,
stay-ups—corporates, public sector agencies, universities, and research institutions—that must keep renewing or they simply will not stay up.
That last category matters more than many people realise. Because if established organisations stop innovating, they may still exist on paper—but they stop being strategically relevant.
That is true for companies. It is true for government. It is true for universities. It is true for research institutions. In a world shaped by technological change, geopolitical volatility, talent competition, and shifting business models, standing still is just a slower form of decline.
Australia needs to start talking about innovation accordingly.
The Australian Bureau of Statistics (ABS) business counts tell part of the story. At 30 June 2024, Australia had 2,662,998 actively trading businesses. Around 1.66 million were non-employing, and another 693,558 employed just 1–4 people. Only 68,214 businesses had 20–199 employees, and just 5,189 had 200 or more employees. In simple terms, Australia has a very broad base of very small businesses, a thin middle of scaling businesses, and a relatively small pool of large incumbents.
That matters, because an innovation ecosystem is not judged only by how many businesses are created. It is judged by whether enough of them grow, whether enough institutions adapt, and whether enough ideas actually move through the system into productivity, competitiveness, and impact.
Innovation only creates impact when it is commercialised, adopted, implemented, or diffused. Until then, it may still be an idea, an invention, or a capability in waiting.
A country can have start-up energy and still have a weak innovation system.
That is the risk Australia needs to confront.