Aussie VC soars, but it’s lumpy
Blue sky views: Record levels of VC investments into Australian companies
The amount of venture capital invested in Australia has soared to a record high, but with a lower number of deals there are concerns about a remaining funding gap for early-stage companies.
In the 2017-18 financial year, more than $850 million ($US630 million) of venture capital was invested in Australian companies, according to KPMG’s Venture Pulse report, while in the second quarter of the 2018 calendar year, more than $280 million worth of VC investments were recorded locally.
Despite the records amount of funding pouring into local companies, however, the number of deals in the last quarter decreased from 31 to 27 compared to a year ago.
This is has led to concerns of a venture capital funding gap for early-stage startups in Australia.
“As the VC focus continues to shift towards larger raises for later stage startups, it raises questions as to where the funding for early stage ventures will come from,” KPMG Australia High Growth Ventures head Amanda Price said.
“This is a real concern, as we are not seeing an increase in angel investors or seed investment,” she said.
“If we want Australia to have a successful and growing startup ecosystem, we need capital at every stage of the pipeline.”
The report found that Australia has a particular strength in AgTech.
“As governments and NGOs strive to ensure they have sufficient food and water for their people, and meet their environmental stewardship obligations, we expect to see interest in AgTech grow significantly and more VC activity,” KPMG Australia head of AgTech and markets Ben van Delden said.
“The rise of AgTech activity and accelerators in Australia is creating more local AgTech investment opportunity, which we expect to lead to more deal activity in the second half of 2018 and beyond.”
While global innovation powerhouse nations were still leading the way, countries like Australia are beginning to compete with the world on AgTech, KPMG head of food and retail Idit Blank-Varol said in the report.
“There are a number of clear geographic leaders when it comes to AgTech innovation and venture capital investment. The US remains the clear leader in this space, however Israel, Australia and India have made inroads. We are seeing a burgeoning AgTech ecosystem,” Ms Blank-Varol said.
“While the US, China, India and Brazil have a strong interest and investment in ag and AgTech given their growing populations, there are also innovative solutions coming out of Israel, Australia, New Zealand and the Netherlands,” the report said.
“For example, regions with multiple climatic conditions, such as Australia, are most likely to have a wider range of AgTech solutions,” it said.
The report found an “unstoppable tide of capital” with a “truly massive tally of VC invested worldwide”. It found more than $US50 billion in venture capital was invested around the world in the first quarter of this year, with the second quarter rising higher to $US69 billion.
In Asia, 466 venture capital deals saw $US35.9 billion raised in the second quarter of 2018 alone, with China leading the way.