According to new data from funding analysis firm , Techboard, venture capital funding for NSW startups started to decline in the 1st quarter of 2024. In 2023 it accounted for two-thirds all Australian investments.
Techboard’s Peter van Bruchem reported that startup investment in the first three-month period of 2024 was down, with $761 million spread across 82 transactions. This figure is similar to the March quarter of 2020, when the pandemic loomed. However, this period included a quarter fewer transactions.
It was the slowest since the September 2020 Quarter ($401m), but still larger than any quarter prior to June Q 2019. Techboard’s data dates back to 2017.
Van Bruchem stated that, “While the funding levels for the quarter of March do not indicate a recovery in the lower funding levels in 2023,” the increase in the average deal size is a positive indication.
“I believe that the drop in funding may be less significant than our figures show. What I suspect is that some companies do not announce what they consider to be less impressive rounds or lower rounds, so a smaller proportion of deals is announced than when the boom cycle is in full swing.
“The work Techboard does on unannounced transactions will go a very long way in testing these theories. But more on that when our next report is released.”
Techboard announced 621 private deals in 2023, resulting in $4.438 billion of investment. This figure is higher than the $3.5bn analysis by Cut Through Ventures, which was based on 413 deals. CTV’s decision not to include crowdfunding in its analysis can explain the disparity, although these campaigns can be backed by venture and family offices, as well as by pre-seed financing by accelerator programs.
The result for last year was almost 50% lower than Techboard’s estimate of $8.991bn in 2021 and 37% lower than the 2022 figure of $7.047bn.
In 2023, the average round size shrank, with deals at later stages below 2018 levels while Series B and earlier deals were closer to 2020 or higher levels.
Climate tech topped the list of announced private investments with $777m, followed by fintech at $758m and healthtech at $574m.
Women’s funding improves
Van Bruchem stated that 2023 was the most successful year for women-only startups since 2020. They received 3.88% from the total capital deployed in 12.58% deals.
This share continued to increase in the first quarter 2024 March 2024 with women-founded startups receiving a 16.36% of all capital raised. This is the best result since 2017 September quarter (25.68%).
The biggest change this year is the amount of money flowing to NSW startups. In 2023, NSW companies accounted for two-thirds all investment. In the March quarter of 2024, this share dropped to around 50%. Victoria closed the gap, moving up from 18% to almost 30% of national investments.
WA deep dive
This year van Bruchem chose to focus on Techboard’s home-state, Western Australia, for its review of start-up funding.
The findings were mixed. WA saw a drop of 46% in announced private funding from 2022 levels. This was a greater proportional drop than 38% nationally. Private investment in local startups was at its second highest level in 2023, at over $90m. Two announcements accounted for just over half (52%), namely Rumin8’s 25m and Vitruvian’s 21.8m.
The state’s share of national funding declined from 2,49% in 2022, to 2.13% by 2023. However, its share of the number deals increased from 6,53% to 8,45%.
Western Australia, however, has a better track record in terms of gender diversity. Only women-founded ventures secured just over 7% announced deals. In 2023, companies with at least one female founder will account for just under 40% (compared to 15.42% nationally) of all private funding.
In the first quarter 2024, WA saw a surge in funding, reaching $67.16m. This was only surpassed by the March quarter 2022, which reached $73.52m.
This figure was skewed because of a single deal, with RealtyAssist’s raise of $38,7m representing 58% the dollar amount invested in the quarter.
Van Bruchem said that the results from Western Australia show how volatile funding levels are.
He said that in many ways, what you see in Western Australia, and other smaller states, is similar to the funding of women-led enterprises, where a few large deals can have a huge impact on overall levels. It is difficult to determine trends.
The Australian Government is increasing investment in startups. This review shows they have a lot of work to do, starting from such a low level.
You can read more about Techboard’s findings in the Australian Review, here, and the WA Review, here.