Nearly a quarter of Australian start-up business are founded outside of capital cities, according to a new report from Universities Australia and Startup Muster.

The report indicated that start-ups (typically a newly emerging, entrepreneurial venture) are projected to create more than half a million jobs across Australia over the coming decades, and that much of the burgeoning start up economy is already in regional Australia.

More than 20 per cent of Australian founders work in regional Australia.

"I think we were really surprised at those numbers," said Universities Australia chief executive Belinda Robinson.

"But what it does suggest is that regional economies … not only need, but are going to be quite well supported by, regionally-based start-up companies," she said.

Startup Muster surveys the Australian start-up ecosystem annually, and founder Monica Wulff said growth was trending towards the regions.

"We're seeing a much greater focus on our regional and rural areas," she said.

"You look at places like Newcastle, Wagga, Wollongong, Sunshine Coast, Maroochydore, where you've got a strong local focus and you've got a university and local business coming together, and it's phenomenal."

Australia has the 'Silicon Paddock'

Ms Wulff calls it the 'Silicon Paddock' — a play on words with the famous area in the San Francisco Bay area where many technology companies are located.

"You can have, through technology now, incredibly connected communities that don't have to be geographically in the same area," she said.

Start-up founder Simone Eyles, from Wagga Wagga in regional NSW, is a self-described 'dinosaur' of the Silicon Paddock.

She was home alone and bored after giving birth to her son, and had a "crazy idea" about opening a drive-through coffee shop.

"I've always had a cafe coffee for work every day, it's my daily guilty pleasure," Ms Eyles said.

"I spoke to my friend Marius, now business partner, about making me a cool ordering system for my drive-through.

"He said, 'ditch the drive-through, let's build the system and sell it to everyone'. And that's what we did."

Now their coffee-ordering app 365Cups has turned over almost $9 million in orders and has new outlets jumping on board every day.

Ms Eyles said starting in Wagga Wagga gave the pair a safe testing ground.

"We could sit in the cafe all day, and we could speak to the owners, we could speak to the users. We were really on the ground getting that early user feedback, and can you imagine doing that in a Sydney cafe?"

"Living regionally helped our start-up because we could still have a great quality of life and do the start-up thing.

"We're not twenty-something hipsters that can live off two-minute noodles."

Internet not a barrier to start-up growth

Ms Eyles acknowledges internet connectivity was "obviously" a high-level issue for regional start-ups.

"But in the regions, the flipside of that is people just get on with it.

"I think that's why you'll see these amazing start-ups popping up everywhere, because they'll find their own problems locally and they'll solve that."

She said the start-up ecosystem was still embryonic.

"But that doesn't mean it doesn't exist. These things take a long time to develop," she said.

Ms Robinson said universities had a central role to play in growing that ecosystem.

"There's a lot of evidence to show that many rust belt places in the US ... have been completely transformed into global innovation hubs because of the universities there," she said.

"There are all sorts of scary statistics out there about the number of jobs that exist today disappearing over the next couple of decades, but of course we've always had that.

"We're really in throes of another industrial revolution," Ms Robinson said.