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Cut Through Venture

Cut Through Venture is Australia's most trusted source for reliable and complete Australian startup funding data.

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Each quarter, Cut Through Venture breaks down the venture capital funding flowing to Australian startups. But we don't dig into the increasingly important startup funding source, venture debt.

Join Five V Capital's Chris Gillings with his VC moderator hat on for a conversation with three of the most active venture debt professionals in the Australian market: Melissa Widner of Lighter Capital, Matt Allen of Tractor Ventures and Nick Gainsley of OneVentures. They'll discuss everything that they're seeing in the market, and the evolving role of venture debt for Australian startups.

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Cut Through Quarterly Q2 2024 is out, and things are looking up. Except for one big problem…

💰💰Funding to Australian startups hit a six-quarter high, with the return of $100M+ mega deals pushing total funding to $1.5B.

🤖🖊️Artificial intelligence deals topped the sector deal count table for the first time after sitting on top of the list of sectors investors are most excited about for a year.

🧔🏻‍♂️🌲Guest contributor Airtree's Craig Blair has high hopes for the decade ahead, envisioning the ecosystem as a job and wealth creation engine for the Australian economy.

👨🏻‍💼🧑‍💼 Investor sentiment continues to improve, with 46% of investors describing the funding market as more favourable compared to last quarter. Additionally, 42% reported assessing more deals, and 30% rated the quality of deal flow as good or excellent.

👩‍💻🚫 The share of capital flowing to female founders plummeted to a level not seen since 2019. While deal share at the Pre-seed stage hit a high, female-led startups were noticeably absent from large later-stage funding announcements.

Thank you to our supporters, HSBC, Corrs Chambers Westgarth, Vanta, GXE, and Deckmatch, for enabling us to deliver another quarterly report.

Download in the comments.

The start of 2024 saw a decline in deals to a five-year low, totalling 66. However, there were a handful of silver linings buried in the data…

💰 Q1 2024 marginally outpaced the first quarter of last year, reaching $703M;
🏋‍♀️ The quarter also celebrated a standout period for all-female founding teams, who achieved an all-time high in funding share and absolute dollars received in a quarter, and 
🌽 The Australian unicorn gang welcomed two new members, Bugcrowd and Deputy.

A dig into the data from Q1 2024 underscored a period of adaptation and selective local investment. Much like what's being seen in VC markets globally, the Australian venture funding landscape continues to evolve in real-time, with no two quarters seeming the same.

🙊 Investor sentiment: The Cut Through Quarterly Investor Sentiment Survey depicted a nuanced view. On one hand, the overall perception of portfolio and market health has improved, but on the other, there's been a noticeable rise in layoffs and company closures. Clearly, the period did not show an uptick in transactions, pointing towards cautious optimism among investors.

🤖 Sector highlights: AI/Big Data and Enterprise Software retained their positions on the excitable sector index. The quarter didn't significantly favour any sector in terms of funding volume, but Climate Tech and Healthtech maintained their recent activity, securing a high number of smaller deals. The weaving of "AI" into company descriptions is increasing, which is starting to give .com-era vibes.

📐 Deal size dynamics: There was a notable decline in smaller deals, but at all stages from Seed onward, those deals that did get done were markedly larger than those at the same stage a year ago. This raises the question of whether the "haves and have-nots" market dynamic has kicked in -- where a focus on quality and potential over quantity, means many startups are missing out while others bask in investor demand..

We thank our sponsors, HSBC, Corrs Chambers Westgarth, and GXE, as well as the long list of investors who provide insights via our Investor Sentiment Survey. We hope you enjoy the report.

The proposed changes to the Wholesale investor laws are at odds with the lack of (needed) investor protection in other investment asset classes. It also fails the 'root cause analysis test' of what we all want to achieve -- which is, retail investor protection.

Any Australian adult can invest in unprofitable ASX-listed mining companies and crypto assets on exchanges, and every Australian is actually encouraged to take out up to 90% leverage to invest in one of the world's most overpriced housing markets. Makes sense!

What other asset classes should the government look to better protect investors from?

Cheryl Mack James Cameron Niki Scevak 🌱 Judy Anderson-Firth ⚡️ Michael Batko Jess Walker Jessy Wu Maxine Minter Edward Hooper 😱 Rayn 🍇 Ong

That's a wrap! Over the past three weeks, we have welcomed 450+ founders, investors, and startup enthusiasts from across New South Wales, Queensland, and Victoria to celebrate the State of Australian Startup Funding with us.

Although the headline figures were down last year, the energy of those who attended our events suggests there is a tremendous amount to be excited about for all Australian innovators and their supporters this year and beyond.

Letsgo!

📈 📊 The State of Australian Startup Funding 2023 is LIVE!
 
We surveyed close to Australian founders and startup investors to unearth insights into Australia’s funding landscape and key trends to watch out for in the year ahead.

Despite a year of uncertainty and challenges, investors and founders envisage a promising outlook for the year ahead.
 
Thank you to Folklore Ventures, our report partner, as well as all our collaborators, partners and investors for making the report happen. A big thank you to all of those listed in the comments below. 

Big shout out to our supporters KPMG, HSBC and Corrs Chambers Westgarth.
 
 The report is live, with a link in the comments to dive into the insights👇

CUTT

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