Record $849 million in venture capital invested in Australian startups in last financial year

- July 16, 2018 3 MIN READ
employee share schemes

Almost $850 million (US$630 million) of venture capital was invested in Australian startups in the 2017-18 financial year, a new record for the local ecosystem, with $282 million (US$209 million) raised across 27 deals in the second quarter of 2018.

According to the latest Venture Pulse report from KPMG, this number was slightly up on the previous quarter, when almost $229 million (US$169.8 million) was raised locally across 31 deals.

This growth was reflected globally, with a record $94 billion (US$70 billion) invested worldwide over the quarter across 3,108 deals; while Chinese fintech Ant Financial’s $18.9 billion (US$14 billion) raise somewhat inflated numbers, the total raised in the quarter without it still surpassed the $67 billion (US$50 billion) raised in Q1.

A growing portion of this funding is coming from later stage deals, with 20 percent in Q2 classed as later stage. According to the report, the median deal size for 2018 has reached $67 million (US$50 million) for Series D raises or beyond.

Locally, Townsville-founded SafetyCulture raised $60 million in a Series C round led by Tiger Global Management, while Canva raised $51 million in a round led by Blackbird Ventures in January. Blackbird itself launched its third fund, of $225 million, in April.

Amanda Price, Head of KPMG Australia High Growth Ventures, said that while Australian venture capital investment is keeping pace with worldwide trends, the growing focus on later stage deals is concerning.

“It is encouraging to see Australian startups gaining access to the capital they need to develop into global companies. However, as the VC focus continues to shift towards larger raises for later stage startups, it raises questions as to where the funding for early stage ventures will come from,” she said.

“This is a real concern as we are not seeing an increase in angel investors or seed investment. If we want to Australia to have a successful and growing startup ecosystem we need capital at every stage of the pipeline.”

The median deal size for angel and seed rounds reached $1.89 (US$1.4 million), $9.4 million (US$7 million) for early stage rounds, and $18.2 (US$13.5 million) for late stage rounds in the year to date in 2018.

Meanwhile, the report also highlighted Australia’s prowess in agtech, stating that while markets including the US and China have a strong interest and investment in agtech, there are also innovative solutions coming out of Israel, Australia, New Zealand, and the Netherlands.

Ben van Delden, partner, Head of Agtech & Markets, KPMG Australia said, “As governments and NGOs strive to ensure they have sufficient food and water for their people, and meet their environmental stewardship obligations, we expect to see interest in agtech grow significantly and more VC activity.

“The rise of agtech activity and accelerators in Australia is creating more local agtech investment opportunity, which we expect to lead to more deal activity in the second half of 2018 and beyond.”

With almost $2.29 billion (US$1.7 billion) was invested in agtech globally in 2017, the first half of 2018 has continued this growth, with more than $808 million (US$600 million) invested across 105 deals in the first five months of the year.

Corporate venture capital investment has also grown globally, according to the report, with corporate VC participation surpassing 20 percent in Q2.

A growing number of Australian corporates are getting involved; peer-to-peer vehicle sharing startup Car Next Door earlier this month announced its raising of $2 million in a funding round led by Hyundai, with participation from existing backer Caltex.

The funding comes as part of a collaboration between the startup and the automaker, with Hyundai working to create ‘sharing ready’ cars through the connecting of its new vehicles to an app, Auto Link, which will allow owners to more easily put their cars up for rent on Car Next Door.

Meanwhile, Air New Zealand last week announced its signing of an ‘International Innovation Partnership’ with JetBlue Technology Ventures, the venture capital arm of the NASDAQ-listed JetBlue Airways, that will see the two organisations work together to identify, help develop, and implement emerging tech in the travel sector.

Earlier this year, Bluedot Innovation raised $7.24 million in a Series A round led by toll road development and management company Transurban, Victorian startup Landchecker raised $1.85 million in funding from investors including RACV, and data exchange startup Data Republic raised strategic funding from ANZ.

Image source: City of Melbourne/ That Startup Show / Photographer Wren Steiner