Investments in Australian start-ups balloons to record level

23 February 2020 Consultancy.com.au

Australia’s venture capital scene has yet again booked a record breaking year, with total spending on promising and fast growing start-ups breaching the $2 billion barrier for the first time.

Funding for early- and late stage start-ups rose by some $600 million in the past twelve months, from $1.6 billion in 2018 to $2.2 billion at 2019’s year end, according to analysis by KPMG. 

The development counters the global trend, which saw a significant drop in total venture capital spending. In 2018, start-ups received $456 billion in investments, and one year on this number had dropped to $390 billion. Asia Pacific saw the largest drop, by around $80 billion to $110 billion at the end of last year.

Venture financing in Australia

“Australia has bucked regional trends, which saw Asia remain the primary weak spot in the global venture capital market,” said Amanda Price from KPMG in Australia.

Despite the growth in deal volume, the number of deals in Australia continues to drop. The fourth quarter of 2019 noted the lowest quarterly number of deals (32) in the past six years, however, at the same time one of the highest total quarterly investments ($512 million) in the period.

Price: “We are seeing larger deal sizes across the board, a strong sign of the quality of venture-backed start-ups emerging from the local eco-system.” 

The $128 million investment in IT company Canva was the year’s largest deal, followed by investments in Secure Code Warrior, Athena Home Loans, Harrison.ai and V2 Food. In stark comparison, two start-ups in China (Tenglong and Beike) and one in India (Paytm) received over $1 billion in funding as investors such as corporates, fund manager and family offices sit on piles of cash in a low interest environment.

Commenting in the outlook for 2020, the KPMG expert said the domestic venture capital market is expected to remain relatively steady, with areas like artificial intelligence, biotech, and fintech remaining very hot.


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