It’s become an annual undertaking — each year Andrew Stead, Director of Business Development at Sydney-based incubator ATP Innovations — pieces together an overview of the state of investment in Australia for investors and founders. He’s just completed a survey of Australian investors, accelerators and startups. We asked him what the trends were:

The incubator and accelerator boom

First thing, says Stead, is the impact incubators and accelerators are having on the startup ecosystem in Australia. As this post on inc.com explains, accelerators take single-digit chunks of equity in exchange for small amounts of capital and usually some mentoring. Accelerator programs tend to run for three to four months. On the other hand, incubators bring in an external team to manage an idea. Business ideas are given a longer period of time to develop. Incubators also tend to take more equity.

According to Stead, the number of incubators in Australia has tripled in the past six years. There are stacks of them now. In Sydney, just to list a few; you’ve got Pollenizer, Blue Chilli, and Ignition Labs (out of ATP Innovations). Blue Chilli also have a space in Melbourne. Melbourne co-working space York Butter Factory (backed by Adventure Capital) started out as an incubator, but now offers desk space without taking equity, similar to Fishburners.

“We’ve seen an explosion of the incubator model,” says Stead. “There have been a few variations from the pure incubator to the co-founding model.”

Accelerators are also on the rise. Stead says programs like Pushstart, Startmate and AngelCube are helping produce dozens of ‘investor ready’ companies: the founders have honed their pitching skills, built a product and tested the market. There’s traction and they’re ready to scale.

Based on Stead’s numbers, 40 companies have graduated from an accelerator program so far in 2012. Six out of the 13 companies which participated in Startmate, the most successful Australian example, have now been funded.

“All of a sudden you have 40 companies that are pitch hardened and investor ready. The quality of pitching with companies from the accelerators is extremely high.”

New investors on the block

There are now 11 angel groups in Australia, says Stead. They’re typically based on the American model, where a founder pitches to an audience, who then ask questions about the startup. Some of the best known are Sydney Angels, Melbourne Angels and Brisbane Angels. Brisbane Angels has done 10 deals in six years, to the tune of $2.4 million. You’ve also got a few different variations on the standard angel group — Innovation Bay and Aurelius Digital still select startups to pitch, but operate more like a networking event, where founders can meet potential investors.

“You’re seeing quality at the bottom end. People in very early-stage businesses are presenting well.”

Sydney Angels is still the biggest group. Its sidecar fund, which co-invests alongside members, now has 40 different investors. In his other role as co-founder of Sydney Angels, Stead has been able to see how it’s changed over the past few years. He says the sidecar fund is made up of people who like the idea of investing in early-stage startups but don’t necessarily have the time to spend reviewing deals.  The Sydney Angels sidecar fund has done 20 deals since June 2009.

Steve Baxter, of River City Labs in Brisbane, has this week launched River Pitch. He says the idea is introduce investors unfamiliar with the technology space to these startups.

“I thought everyone talks about it, but someone has got to do it,” says Baxter, “we had 33 investors come to the first event.”

Baxter says Brisbane has underdeveloped tech startup scene, but this is slowly changing. He says you need some catalysts to kick off growth. Launching River City Labs has helped bring together a community of people working on startups. He says it’s a bit like Sydney’s Fishburners  in that people can come in and use a desk, organise a meet-up or network with other founders. The next stage is to educate investors about the technology space.

“I’d been to Innovation Bay in Sydney and thought it was a good way to introduce investors to this kind of startup. We deliberately went out and targeted people — I stripped the top 150 rich list and emailed invites.”

Stead says a few years ago you’d see one or two angels invest $50,000-$100,000 in one startup, whereas there seem to be more people investing in a number of companies; $10,000-$25,000 in multiple deals. Stead says according to US research, an investor portfolio needs to be 10-20 deals in order to return two-and-a-half times the value. He says more people are taking an interest in the early-stage company “asset class” — professionals like lawyers and accountants are starting to dabble in the tech space.

We’re seeing more corporates investing in early-stage companies now too. The Optus Innov8 program is set to announce its first two investments before Christmas. GE have also launched Ecomagination, a clean-tech venture fund. There are a number of other Australian corporates which have invested in startups in the past 12 months — APN co-founded referral based recruitment startup Accruto; Salmat is the main investor in Roamz, a location-based social network; and Telstra has invested in startups like restaurant reservation portal Dimmi, and IPscape, which provides applications for contact centres.

“These corporates look for innovation they can drag in. It can also be a branding thing.”

There are growing numbers of early-stage VC Funds too, says Stead. The $15 million Blackbird Ventures is soon to launch. You’ve also got funds like Square Peg and One Ventures investing in Australian startups.

Increasing publicity

Stead’s not too sure what comes first — the chatter or the activity — but either way, there are now more people talking about startups. That’s led to more interest in how it all works. He says the major news outlets now have journalists covering the space: Jessica Gardner at the Financial Review, Asher Moses at the Sydney Morning Herald, and Mahesh Sharma at ZDNet. You’ve also got digital publications like Anthill and StartupSmart covering startups.

In the past, says Stead, you’d only see coverage of deals in the Australian Private Equity and Venture Capital Journal.

“It’s been six years since I started in this space, and since then the whole market has changed. Once you’d been to uni you were meant to join a big corporate — there are a lot more people now looking at startups.”