Startup investment climbed to US$555m in 2017 but significantly fewer deals were struck


Nearly US$560 million was invested in Australian startups, last year, a 1.4% increase on 2016; however, the number of investment deals fell 27%, according to a new report from KPMG International.

The professional services giant’s latest Venture Pulse, a quarterly report on global venture capital investment, shows that Australian startups closed 17 deals, worth $121.55 million during Q4 2017, an increase on the same period in 2016 when $105.15m was invested.

Significant deals recorded in the final quarter of 2017 included $30M invested in IR Exchange, $25.72M in Airtasker and $19.5 in Spaceship. However, while the total amount of Australian venture capital invested rose, the number of deals fell significantly from 185 in 2016 to 135 in 2017.

Amanda Price, Head of KPMG High Growth Ventures, told Dynamic Business that the increase in deal value “reflects the increasing investment at later stages in startups, particular at the series A level in Australia”.

Meanwhile, she said the simultaneous decline in the number of deals “would appear to indicate a slowdown in early stage investments”.

“With seed and angel funding still a vital part of our startup ecosystem, we are hopeful that the decline in deal number is a temporary shift rather than a major structural change in the VC market,” she said.

“This maturing deal flow also reflects the global statistics, with first-time VC financing falling for the third straight year – to $13B across 3,813 deals.”

Price didn’t have any Australian-specific statistics around funding sourced from local and overseas VCs and corporates; however, she said, “anecdotally, we have seen Australian VCs raising and deploying record amounts of capital”. She continued, “At the same time, Australian startups are also appearing on the radar of US VC firms. We also have seen increasing levels activity from a number of Australian corporates, notably bank-backed funds like Reinventure and NAB Ventures”.

Asked which startups were attracting the most funding, Price replied: “Australia continues to see the creation of very exciting enterprise tech startups, with many following in the footsteps of standout businesses like Atlassian, Campaign Monitor and SimPro – all of which raised significant funding from international VC investors”.