During the early days of the economic contraction triggered by COVID-19,
global reporting indicated significant slowdowns in venture capital (VC)
funding, with falls recorded across China, Europe and the US in the third
quarter or FY20.1 Techboard data has not shown the same contraction in
Australia. While the number of recorded funding events dropped during the
third quarter of the financial year, total funding appeared to plateau and
then increase in the last quarter to its highest level ever recorded
(excluding the $1.6bn PEXA (Property Exchange Australia) acquisition), with
$2.4bn funded in the three months to June 2020.
However, the number of private deals at the lower end of the scale (sub
$5mn) contracted during Q3 with a recovery in deals from $1-$5mn in Q4 and
sub $1mn deals continuing to decline in Q4.
Total reported startup funding from all sources (private, public, grants,
crowdfunding, accelerators and acquisitions) during the 2020 financial year
was $6.9 bn. This total is in line with the previous year’s $6.8 bn, but
almost double the $3.5 bn reported in FY18. Private investment levels,
however, moved markedly from 2019 from $2.26bn to $4.48bn, with the number
of private investments captured rising by 23% to 377 deals.
This is a strong performance for a year significantly impacted in its
second half by a global pandemic and unfolding economic contraction. The
Australian venture capital markets appear to have weathered the COVID-19
storm well – at least initially, though other funding sources (such as
public markets) perhaps less well.
The funding data collected by Techboard over the past three years suggests
a maturing of the startup and tech sector in Australia, with funding events
generally getting larger as companies are maturing.
In particular, between FY18 and FY19 there was a marked uptick in funding
events greater than $100mn, up 167% in quantity and 235% in value. Funding
events of all sizes increased year-on-year between FY18 and FY19, with the
exception of deals in the $5mn-$10mn range. From FY19 to FY20, funding
events again increased year-on-year in all categories, including in the
$100mn+ range when the PEXA acquisition is removed.
An increasing volume of $100m+ deals also suggests an increasing number of
unicorns emerging on our shores. We look forward to this trend continuing
in Australia, as high-profile success stories will attract more investors
to the venture capital and angel investment asset classes.
On a per capita basis, Victoria had a strong FY19 ($352) but experienced
minimal growth into FY20 ($356) while NSW grew strongly (up 115%) from FY19
($229) while NSW fared better in FY20 ($492). In both cases fintech
megadeals drove the high funding levels.
In Australia, funding of local startups sits around $271 per capita per
annum. This takes an all-sources view of funding, and includes VC, angel,
acquisitions, public markets and grants. Narrowing the view to only include
private funding of startups, the figure is closer to $121 per capita. This
compares to $604 in Israel and $412 in the US according to data published
Late last year StartupAUS’s Crossroads Report reported a worrying trend in
angel and seed funding, with a continued decline in number of deals
recorded from FY17 to FY19. This was based on data recorded by US-based
data provider Pitchbook. Techboard data, which includes exclusive data
sourced directly from Australian angel groups, paints a less worrying
Private deals in the sub $1mn range have remained relatively stable over
the past three years at just under 100 per year, and would likely have
shown more of an increase in the last year were it not for the impact of
COVID-19. Data collected from the major angel groups shows total funds
deployed remained steady at circa $10 million in FY18 and FY19, but
increased to $14 million in FY20, despite a drop off in activity in the
last quarter following COVID-19.
Data on angel investment has been historically difficult to track because
many seed stage deals remain confidential. While many high-net-worths
invest independently, many angels join local angel groups in order to
benefit from increased deal flow and peer support. As such, angel groups
can provide some insight into the overall activity level of the asset
Click here to read the full report.
Techboard, founded by Peter van Bruchem and Rafael Kimberley-Bowen has been
tracking funding of Australian Startups and Young Technology Companies
since 2017. Itis a leading source for up-to-date data on the Australian
startup and young technology company ecosystem. Techboard maintains three
interlinked datasets which include a directory of more than 3,800
Australian startups and young technology companies, comprehensive funding
and deal data and an Investor/funder dataset.
Techboard publishes free reports containing high level insights and
provides subscription access to its company, deal and investor data and a
recently updated platform and Funding Event Search Engine.