Investors pour record-breaking funding into Australian startups

28 January 2019 Consultancy.com.au

Startups in Asia raised over US$93 billion last year, up from roughly $65 billion the year previous, on the back of a number of mega-deals in the region. In Australia, venture capital (VC) invested hit a record $900 million.

In the fourth quarter alone, Asia saw four deals above the $1 billion mark – led by a $3 billion raise by China-based ByteDance. The latter deal however pales in comparison to 2018’s top deals – the $14 billion raised by China’s Ant Financial in the second quarter, followed by the 12.8 billion funding round completed by US-based e-cigarette manufacturer Juul.

Globally, venture capitalists poured over $255 billion into startups and other early stage companies, a record-high despite a third-straight decline in annual deal volumes. Key areas of investment included artificial intelligence, autonomous vehicles, ride hailing, healthech, fintech and biotech. In a market dominated by private equity firms, corporate venturing reached an all-time high, with corporates participating in over 20% of all deals. In Asia, this percentage was even 30%.

Venture financing in Asia

Meanwhile, in Australia, venture capital investments reached $899 million in 2018, up from $656 million the year previous. “2018 was the biggest year ever for venture capital investment into Australian startups. For the first time we are starting to see a steady flow of major funding rounds over $10 million aimed at helping locally founded businesses take on global markets. In Australia the diversity of the startups being funded is testament to the scale of the economy and opportunity,” explained Amanda Price, Head of High Growth Ventures at KPMG in Australia.

Major funding deals in the country included Deputy’s $81 mil Series B round, Nura’s $21 mil Series A round and Gilmour Space Technologies $13.9 mil Series B. The third quarter was Australia’s top quarter with 41 deals worth $325 million, compared to for instance 15 deals closed in the year’s last quarter.

Commenting on the outlook for 2019, Price said: “We expect a pricey climate and volatile market environment which will lead to increasing caution on the part of investors, even though there remains record capital to deploy.”

From a global perspective, John Lavender, Global Chairman of KPMG Enterprise, remarked that it is foreseeable that 2019 may not improve upon the results achieved in 2018. “However, there will continue to be a substantial amount of venture capital invested globally, particularly in safe bets and later stage companies. This will likely result in the average deal size continuing to increase while deal volume either remains steady or drops further.”