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Image Credit: Folklore Ventures and Cut Through Venture

Flush with Cash: Aussie startup funding crosses the $10 bn mark in 2021

Australian startups received over $10 billion in funding, and the number of deals surged to almost 700 in 2021, showcasing Australia’s emergence as an innovation hotspot. 

The amount is more than three times the total confirmed equity funding received by Australian startups in 2020 and more than 2018 through 2020 combined, according to the inaugural State Australian Startup Funding report findings.

The report, published by Folklore Ventures and Cut Through Venture, with support from Google Cloud, Cake Equity, Fresh Equities, and Aussie Angels, analyses input from over 800 Australian founders and startup investors. 

Discussing the investment in startups, Folklore Ventures’ Founder and Partner Alister Coleman said, “We’re entering a new age for Australian startups, one where we become a hub for global success stories, talent and category leaders. 

“As more funding goes into our startup ecosystem, it’s important that we have a resource like the State of Australian Startup Funding to understand and highlight how far we’ve come and where the biggest opportunities lie in the years ahead.” 

Seed funding rounds buzzing

According to the report, there were more rounds worth more than $100 million in 2021 than in the previous three years combined and more rounds worth more than $250 million than in the Australian ecosystem’s entire history. 

Furthermore, average funding round sizes increased across all stages, with the most significant increases seen in Seed (114 per cent) and Series A (49 per cent) rounds.

Because of the fierce competition for deals at all stages, average round sizes increased significantly from Seed to Series C. This followed a global trend in which startup investment increased across all industries, geographies, and stages.

2022: the year of cleantech and Web3

Fintech startups raised $2.5 billion, accounting for 25percent of all equity capital raised. This was four times the amount of money allocated to the sector in 2020. In the second place, Enterprise/Business Software raised just under $1 billion.

Blockchain/Cryptocurrency, Marketplaces, and DevTech funding increased by more than 700 per cent. Climate or clean tech surpassed crypto and Web3 as the category in which investors are most excited to invest in 2022, followed by fintech, AI/Big Data, SaaS, and then Blockchain, Crypto, and Web3.

Fintech and SAAS startups raised more capital in 2021 than all Australian startups in 2020 combined. In 2021, the top five sectors accounted for more than half of all capital raised. PropTech, RealTech and BioTech, MedTech saw the most significant rises among the leaders, rising from 11th and 14th place, respectively, in 2020.

Bridging the Gender Gap: Work in progress

While encouraging compared to global figures, Australian female founders’ equity funding share improved only marginally in 2021. 

Total funding events involving startups with at least one female founder more than doubled between 2020 and 2021, but the percentage of deals involving female founders only increased from 18 per cent to 19 per cent. 

2021: A year like no other 

Each quarter in 2021 placed within the top four largest funding quarters of all time, with Q3 being the largest quarter on record. Furthermore, 75 per cent of Australian professional startup investors believe overseas investors were more active in the Australian market in 2021. 

“The startup ecosystem proved its resilience in the face of a global pandemic and a highly volatile, uncertain global and local macroeconomic climate. All signals point to that resiliency continuing into 2022,” the report stated. 

Busiest year for local startup investors

It was the busiest year on record for local startup investors at all stages. We polled over 180 of them and discovered that more than half of investors saw an increase in the investment rate. However, almost everyone agreed that valuations and deal competition were rising. 

Bede Moore Managing Partner, APAC at Antler, said that the Australian ecosystem is maturing rapidly to challenge global counterparts in early-stage venture investing.

“2022 has already seen multiple record-breaking funds being raised to target the Seed to Series B stages. This influx of later-stage capital complements Antler’s global platform and local fund well. With the healthy capital momentum in Australia, the domestic early-stage market is well-positioned to remain hedged against any global macroeconomic turbulence.

Global Investors

Top global funds significantly increased their activity in Australia in 2021. Tiger Global made more startup investments than any other fund globally, and it led the pack of international-based funds investing in startups. 

Australia. Tiger was joined by a who’s who of well-known global VCs who took part in all deals. The year’s largest deal was led by K1 Investment Management and Level Equity, which invested in SimPro. 

Tiger, Bessemer, Dragoneer, Felicis, Sequoia, GSquared, Lone Pine, Softbank, and Insight were all involved in deals worth $200 million or more.

To download the full report, please visit https://australianstartupfunding.com/ 

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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