A report on 2023 Australian start-up funding that logged A$739 million of September-quarter capital raised in 77 deals says more than half the respondents to its latest investor survey “anticipate an uptick in activities” from international players in the next six months despite their lack of direct participation in local deals so far this year.
Cut Through Ventures’ Q3 start-up funding update says the quarter total was down 9% on the previous three months. Its 2023 start-up funding total is 42% below the first three quarters of 2022.
It said latest survey data was collected from 161 venture capital firm, angel syndicate lead and family office participants.
Cut Through said while some of the most active funds in 2021-22, such as Tiger Global, Sequoia, A16Z, and January Capital, were yet to announce deals in 2023, a higher incidence of offshore investor involvement in local transactions, versus 2022, was showing up in its data.
“Contrary to prevalent anecdotal commentary, the Australian ecosystem has not been abandoned by international investors,” Cut Through Angels syndicate founder Chris Gillings said.
“A closer look at the data reveals a more nuanced situation, indicating sustained and possibly even intensified – in the scheme of things – international interest in Australian start-ups.
“In 2023, the percentage of deals [so far] that included at least one international investor reached an unprecedented high across all funding rounds. While this represents a relatively lower total investment in Australian start-ups, given the overall slowdown, the data challenges the perception that global investors have retreated any more than their domestic counterparts.
“This trend is underscored by our latest quarterly Australian VC survey which found that 46% of respondents co-invested with international counterparts in the past six months.
“Only a quarter noted witnessing an international investor bypassing a follow-on investment opportunity in a jointly owned portfolio company.”
Cut Through said “mega deals”, worth more than A$100 million, continued to prove elusive this year, with no deals comparing with last year’s three on average per quarter.
Australian mining technology firms Plotlogic (A$28 million series B), Nomad Atomics ($10m series A) and MGA Thermal $8.3m series B) were listed among Cut Through’s 30 largest September-quarter fund-raisings.
“Funding and deal numbers dropped in Q3 compared to Q2, but our survey reveals a marked shift in investor sentiment,” Gillings said.
“Historically, Q4 was the strongest quarter in 2020, 2021, and 2022.
“Whether this trend continues in 2023 will determine the momentum and mood in which we enter 2024.”