James Riley
September 11, 2018

StartupLand posts capital record

Policy

StartupLand posts capital record

Peter van Bruchen: The state has eaten the lion's share of money raised last year

Australian startups and fast growing tech companies raised more than $3.5 billion across more than 730 separate investments in the financial year to the end of June, according to Perth-based startup directory and monitoring service Techboard.

The three major sources of funding used by startups and young tech companies last year – each worth more than $1 billion for the year – were public funding via the stock market, private investment including venture capital, and debt financing.

Companies based in New South Wales raised the lion’s share of the total, bringing in $1.58 billion, or 44 per cent of the total, twice the $784 million raised by Victorian based companies (22.1 per cent of the total) and the $767 million raised by Queensland companies (21.6 per cent0.

Techboard identified and analysed more than 736 capital raisings from public sources both manually and via semi-automated screening of the over 2500 companies that are actively tracked. Techboard also has deals reported via relationships with investors, investment groups, angel groups and government bodies across the country.

The most significant funding source was via public investment with $1.075 raised either by listing – both via initial public offering and reverse take-overs/backdoor listings – or placement (and other post-listing raises). Although there were no Australian Tech IPOs of the scale of the planned but later cancelled IPO by Sydney FinTech lender Prospa over the year there were 22 Australian tech listings, raising collectively $170 million.

All but one listing (of the Perth-based Schrole Group ASX:SCL by reverse take-over)) was by Initial Public Offering (IPO). The largest IPO was a listing on the Alternative Investment Market (AIM) of the London Stock Exchange by Sydney based data management and cloud integration platform Maestrano which raised $21m (£12m).

The largest Australian Tech IPO on the ASX was Western Australian based Data CentreOperator, the Data Exchange Network which raised $16m, followed by Raizinvest ($15.1m) the micro Investing app company that recently parted with US-based Acorns.

The report found that more than $915 million in venture capital was raised over the year in 118 funding events. When other forms of private investment are added – including $81 million of seed and angel investments, $7.8 million of accelerator and $6 million in equity crowdfunding – total private investment adds up to $1.01 million.

The largest VC investment was the Big Commerce $85 million raise led by Goldman Sachs, followed by Canva’s $50 million raising led by Sequoia China with Blackbird Ventures and Felicitis Ventures. The report did not include some significant raisings due to the age of the company (Techboard only tracks companies up to 10 years old) like the $60 million Safety Culture raised.

The most funded category was FinTech with $1.038 billion over the financial year. MoneyMe was the most funded Fintech, with a $120 million oversubscribed asset-backed securitisation deal. The largest private investment in a FinTech company was superannuation startup Spaceship, which closed a $50m round in the second quarter from investors including US-based VC Amplo and Atlassian founder Mike Cannon-Brookes.

Techboard chief executive Peter van Bruchem says the funding metric operated as a short term indicator of growth potential or success prospects for individual startups and could serve as a barometer for the near-term progress of the sector.

Mr van Bruchen said the company had predicted the capital raisings for the sector would top $3 billion, and even with a quiet FY fourth quarter “we exceeded that amount by a good margin.”

The next year should well be expected to continue that strong growth, and got off to a flyer with the US$80 million raise by Airwallex – a record – in the first days of the new financial year.

“There has been a marked rise in large scale private investment, not just from the VC sector although we are starting to see increased deployment of VC capital and that looks to be continuing into the new financial year,” Mr van Bruchen said.

“I think it is too early to predict how things will go on the ASX, but we did observe a number of IPOs being cancelled and delayed in the last FY – particularly in the 4th quarter – aside from the high profile planned raises by Unlockd (now in administration) and Prospa,” he said.

“The heat certainly appears to have gone out of the ICO market, and this is probably linked to both prices of the key crypto-currencies but also increased regulatory interest as well as crypto investors becoming more cautious and savvy.”

Mr van Bruchen said that while the Techboard team put huge energy into “capturing as many funding events as possible,” the cooperation the company has been able to get from investors, investment groups and companies who have reported funding events had made a huge difference to the quality of the data.

“As we progress and develop more and stronger relationships and gain the trust of the ecosystem we will be able to present an even clearer picture of Australian Startup and Tech Funding," he told InnovationAus.com.

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