TLDR:
- Australian start-up funding dropped 45% in the March quarter
- Only 66 deals were closed, the fewest in six years
Article Summary:
Australian start-ups experienced a significant decline in external funding, hitting a six-year low in the first quarter of the year. Data from Cut Through Venture revealed that start-ups in Australia raised A$703.1 million in capital in the March quarter, a 45% decrease from the previous quarter’s A$1.3 billion raise. This quarter saw only 66 deals being closed, marking the lowest number in the six years of data tracking. The slowdown in funding was attributed to a lack of lead investors, causing many deals to not close as investors became more cautious.
Despite the decrease in deal frequency, the average and median investment values increased, indicating a focus on fewer but potentially more promising companies. However, this trend did not extend to the earliest investment stages, where the median value dropped significantly. Notable successes during this quarter included cybersecurity firm Bugcrowd and software company Deputy achieving unicorn status. Female-led teams secured 21% of the capital raised, a record high, although they faced lower median deal sizes compared to all-male counterparts.
The report also highlighted the rise in layoffs and company closures within investor portfolios, underscoring the challenging environment for Australian start-ups. The pandemic-induced surge in fundraising for start-ups shifted as interest rates increased, affecting venture capital investments. This shift in investment landscape, coupled with the Australian VC market’s reluctance to lead investment rounds, has led to a cautious approach by investors.
