Investment by venture capitalists reached $630 million in Australia in the 2017/18 financial year, according to figures released by Big Four professional services firm KPMG.
Australia’s venture capital scene has grown by 12% over the past year to an all-time high, while the overall number of deals has fallen. Data released by KPMG in its quarterly ‘Venture Pulse Q2 2018’ report highlighted a growing trend of venture capital investors investing higher sums in more established start-ups in Australia.
Venture capital in Australia is at a record high this quarter, reaching a global total of $69.8 billion. Australia’s slice of the venture capital pie was $209 million across 27 deals during Q2 2018.
The biggest deals across the country were for Australian online graphics platform Canva and for SafetyCulture, an Australian occupational health and safety company with the well-known inspection app iAuditor.
Canva sold for $40 million in Series C funding, valuing the startup at around $1 billion, according to Business Insider. SafetyCulture was the startup that raised the most in 2018, however, with a staggering $60 million capital injection.
“Australia has a huge future in technology and we are proud to play a part in its development. Such a significant injection of overseas capital allows us to continue to grow and invest in our local talent,” said SafetyCulture Founder and CEO Luke Anear.
Amanda Price, director of KPMG Australia High Growth Ventures, said she was excited by the interest in Australian start-ups. “Venture funding in Australia continues to grow and keep pace with global trends. It’s encouraging to see Australian startups gaining access to the capital they need to grow in a global company.”
However, the number of stores in Australia fell, falling by four to 27 in the second quarter of 2018 compared to last year. Australia is experiencing a phenomenon on a par with the rest of the world in this regard. “As the focus of venture capital continues to shift toward larger raises for later-stage startups, it raises questions about where the early-stage funding will come from,” Price said.
This concern is growing, with Australian early-stage entrepreneurs looking overseas for venture capital investors increasingly being shut out. Price fears that the decline in seed and angel investment could lead to a halt in Australia’s start-up scene.
“This is a real problem because we are not seeing an increase in angel investors or seed investments. If we want Australia to have a successful and growing startup ecosystem, we need capital at every stage of the process,” she said. This is because investors are more selective about where they put their money and are not the ones to hand out the first checks.
Globally, venture funding peaked in Q2 2018 reach investments of over 70 billion dollarsthe highest in history. That includes one gigantic $14 billion round for Ant Financial. Without this single transaction, the quarter would still be the second largest on record, surpassed only by the first quarter of 2018. However, the number of transactions worldwide has fallen by less than half, rising from 5,500 at its peak in 2015 to around 3,000 today.
“Recent fundraising by Australian venture capital funds means our startup founders have more money on the table than ever before,” Price said. “With larger investment rounds reflecting the ambition and ability of these start-ups to expand into global enterprises.”
“Venture investors continue to pour money into late-stage companies, in part because of the number of aging unicorns that have gone private,” adds Brian Hughes, National Co-Leading Partner, KPMG Venture Capital Practice and KPMG US Partner.
Meanwhile in Asia, venture capital exceeded $14 billion for the fourth quarter in a row. Funding for start-ups across the continent reached $14.6 billion across 317 deals in the region. The biggest deals were in Singapore and Indonesia, with China, India and Japan also taking a significant share of the venture capital investment space.