Start-up investment hit US$555 million in 2017

Funding for Australian start-ups remained strong in 2017 as it went up by 1.4 per cent to hit US$555.63 million, according to the 2017 Q4 Venture Pulse, a quarterly report of KPMG International on global venture capital investment.

Venture Pulse reported that the Australian venture capital (VC) scene still saw plenty of venture capital funding invested even as fewer fundings were made in Q4 2017 at 135, compared to 185 closed in Q4 2016. This is attributed to some significantly-sized deals that were closed during the period, such as the $30 million funding of IRExchange, $25.72 million in Airtasker and $19.5 million in Spaceship. The report also noted that the said decline is more a temporal aberration than any more serious factor at play.

Amanda Price, Head of KPMG High Growth Ventures, said, “Australia’s start-up investment scene has rapidly matured, with professional VC firms raising and deploying increasing levels of capital over the past few years. The speed of growth has been coupled with an evolution in how investors approach start-up ventures, with a shift towards pre- and post-series A funding.

“At the same time, we are seeing increasingly sophisticated Australian start-ups scaling on the global stage. With seed and angel funding still a vital part of our start-up ecosystem, we are hopeful that the decline in deal number is a temporary shift rather than a major structural change in the VC market,” Ms Price added.

VC investment also rose globally, with $46 billion in startups during Q4 2017, with VC investment in the Asia-Pacific region reached an annual high of more than $48B last year.

The report expressed optimism that the global VC market will remain strong this first quarter of 2018, although the declining number of deals could pose some challenges ahead. Areas like healthtech, biotech and autotech are expected to continue to grow at a rapid pace, while artificial intelligence across industries will likely help drive significant investment rounds. Newer areas like foodtech and agtech are also expected to gain traction as well.

Ms Price noted, “The applicability of innovative technologies, whether AI and machine learning or blockchain, to different sectors will likely keep investors focused and investment high regardless of any pauses among specific industries. With many Australian VCs continuing to deploy capital and more funds being raised, we expect 2018 to continue to see strong activity in start-up funding.”

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