Regional startups redefine innovation

When people think of investing in the startup scene, their minds often go to crowded urban centers such as Sydney and Melbourne.

However, there is a growing movement focused on regional startups that are redefining innovation outside of major cities. Unfortunately, various myths surrounding these startups persist, leading many investors to overlook what could be some of the most rewarding investment opportunities.

This article aims to debunk these myths and shed light on the potential of regional startups for both founders and investors, with insights from the Regional Angel Investor Network (RAIN).

Myth 1: Regional startups lack innovation

A common misconception is that innovation only exists in major cities.

However, according to the Startup Muster Report 14 per cent of Australian startups are located in regional areas, demonstrating that innovation is not confined to the big cities. In fact, many regional startups are solving unique problems that urban companies may overlook.

Whether it's leveraging agricultural technology in rural areas or solving logistical challenges faced by regional communities, regional startups bring fresh perspectives and often operate in less saturated markets.

For example, consider the agricultural technology sector, where startups based in regional Australia have pioneered innovative solutions in precision farming, water management, and sustainable energy, sectors crucial to the economy.

The innovation emerging from these areas often has a significant competitive advantage due to deep local market understanding.

Myth 2: There is no support network in regional areas

Another myth is that regional startups lack access to a support network of investors, mentors, or accelerators. However, this has been changing significantly in recent years.

Organisations like RAIN are at the forefront of this shift, connecting regional entrepreneurs with investors, advisors, and networks typically concentrated in urban centers.

RAIN is composed of Angel investors specifically interested in startups based outside metropolitan areas, or those whose innovations have a strong regional impact. These investors recognise the unique challenges that regional founders face and are eager to support businesses that may not have access to urban-based capital.

As a network, RAIN believes that there are great untapped opportunities in the regions, and its members are excited to offer capital, counsel, and connections to help these startups succeed.

Myth 3: Regional startups are riskier investments

Startups, by their very nature, carry risks, but it's inaccurate to assume that regional startups are inherently riskier than their urban counterparts. If anything, regional startups are often more capital efficient due to lower operating costs and less competition.

Labour, real estate, and other business expenses tend to be more affordable, allowing startups to stretch their funding further.

A recent report from the Regional Australia Institute found that regional businesses can reduce operating costs by up to 30 per cent compared to their urban counterparts, making them highly efficient.

Additionally, regional founders tend to be more grounded in the realities of their industries, as they often have lived experience in the sectors they are disrupting such as agriculture, tourism, or regional healthcare.

This deep-rooted knowledge can mitigate some of the risks that come from launching a business in a less familiar industry.

Myth 4: Regional markets are too small for scale

Another misconception is that regional markets are too small to sustain scalable businesses. This overlooks the fact that many successful regional startups go beyond serving just local markets. They expand nationally and some even internationally.

Regional businesses often start by meeting local needs but soon adapt their offerings for broader applications. Moreover, many innovations in agriculture, logistics, and manufacturing that arise in regional areas can find eager customers worldwide.

The role of RAIN in empowering regional startups

RAIN plays a vital role in addressing these myths and helping regional startups thrive. Its members are passionate about driving economic growth in regional Australia by investing in businesses that have strong local roots and significant potential for impact.

Beyond funding, RAIN investors offer mentorship, strategic advice, and access to wider networks of experts and partners that regional startups might not otherwise be able to tap into.

RAIN sees regional Australia as an untapped market for investment, with abundant opportunities waiting to be seized.

Conclusion

Investing in regional startups offers a host of untapped opportunities, and the myth that these startups are somehow less innovative, riskier, or lacking support is just that a myth.

Organisations like RAIN are working hard to debunk these misconceptions and show that some of the most promising startups can come from outside urban centers. With access to strong networks, capital, and mentorship, regional startups are poised to create impact on both a local and global scale.

For Angel investors and venture capitalists, the time to explore the untapped potential of regional Australia is now.

- Regional Angels

• ACM is a proud partner of Regional Angels