Techboard’s funding analysis reveals NSW gets the lion’s share of VC investment, but it’s starting to wane

Venture capital funding for NSW startups began to decline in the first quarter of 2024 after swallowing two-thirds of all Australian investment in 2023, according to new data from funding analytics firm Techboard.

Startup investment in the first quarter of 2024 had slowed with $761 million invested across 82 deals recorded over the first three months, Techboard’s Peter van Bruchem said, a figure similar to the 2020 March quarter as the pandemic loomed, although that period included a quarter fewer deals.

But it was the slowest quarter since the September 2020 quarter ($401m), although larger than every quarter pre-June Q 2019. Techboard’s data goes back to 2017.

“While funding levels for the March quarter don’t indicate a recovery from the lower funding levels seen in 2023, the general increase in average deal sizes is a positive sign,” van Bruchem said.

“I think that the drop off in funding may not be as significant as our figures show. What I suspect is happening is that some companies are not announcing what they regard as less impressive rounds or down rounds so a lower proportion of deals are being announced than when we are in a boom cycle.

“The work Techboard is doing on unannounced deals will go a long way to test these theories but more on that when we release our next report.”

In 2023 Techboard captured $4.438 billion in investment from 621 announced private deals.

Last year’s result was nearly 50% lower than Techboard’s 2021 figure of $8.991bn and 37% down on the 2022 level of $7.047bn.

What was noticeable in 2023 was average round sizes shrinking, with later-stage deals below 2018 levels, while Series B and earlier sat at closer to 2020 levels or higher.

Climate tech enjoyed the most investment at $777m in announced private investments, closely followed by fintech with $758m, with healthtech coming in at $574m.

Funding for women improves

van Bruchem said 2023 was the best year since 2020 for women-only founded startups, who received 3.88% of the total capital deployed from 12.58% of deals.

That share continued to improve in the first quarter of 2024 March 2024, with women-founded startups getting a 16.36% share of all capital raised, the best result since the 2017 September quarter (25.68%).

But the biggest shift this year is in the amount of funds flowing to NSW startups. In 2023, NSW companies banked two-thirds of all investment. In the 2024 March quarter, that share fell to around 50%, with Victoria closing the gap, moving from around 18% to nearly 30% of national investment.

WA deep dive

This year van Bruchem decided to take a closer look at Techboard’s home state, with its first review of startup funding in Western Australia.

The findings were mixed, since WA saw a 46% drop in announced private funding on 2022 levels, at a larger proportional drop than the 38% national fall. Nonetheless, private investment in local startups in 2023 sat at the second highest level since 2018 at over $90m. And two announcement took up just over half (52%) that figure – Rumin8’s $25m and Vitruvian’s $21.8m.

The state saw a decline in its proportion of national funding in 2023, from 2.49% in 2022 to 2.13% in 2023 but an increase in its share of the number of deals from 6.53% to 8.45%.

But Western Australia has a stronger track record on gender diversity, with solely women founded ventures securing just over 7% of announced deals. Companies with at least one woman founder accounted for just under 40% of all private funding in 2023, compared to the national figure of 15.42%.

Already in the first quarter of 2024, WA has seen a spike in funding to $67.16m, a result only pipped by the 2022 March quarter at $73.52m.

But that figure was skewed by a single deal with RealtyAssist ‘s $38.7m raise representing 58% of the quarter’s dollars invested.

van Bruchem said the Western Australian results show just how volatile funding levels can be.

“In many respects what you see in Western Australia and other smaller states is similar to what is happening in funding of women-led ventures, where a small number of large deals can have an outsized impact on overall levels, making it difficult to determine overall trends,” he said.

“The Australian Government is making efforts to increase investment into startups. This review shows that coming from such a low base they have a long way to go.”

You can read more on Techboard’s findings at analysis with the Australian Review here and the WA Review here.