Written by Anthony Anderson and Roland Kulen:
Excuse the Blunt Talk!
Here’s a quote from the SMH that, well, really is a bit annoying!
“Investors are frothing on Australia at the moment … They’re genuinely saying, I haven’t invested in something in Australia yet, I want to. They want to know what’s going on down here.”
Really…
So Australia is some backward looking outpost that investors are FINALLY interested in?
We’re not ‘Riding on the Sheep’s Back’ anymore!
We’ve got great universities, a vibrant startup ecosystem, one of the wealthiest nations in the world by GDP per capita, hosting the Olympics for the 3rd time, not to mention the other world class events including the Australian Tennis Open (with or without Novak) … and overseas VCs don’t know what’s going on down here?
The good news for Mr Yum is that they recently raised $89 million in a Series A round. Mr Yum is one of the largest deals in Australia’s history, and catapults this deal into the rarefied space occupied by Aussie startup darlings such as Airwallex, Brighte and Canva.
Snapshot of the Australian Venture Capital Market
According to the latest KPMG Venture Pulse Report, capital invested into Australian startups increased to $US2.5 billion in the last financial year, which was up from $US1.95 billion in the previous year. This equates to a 28% increase in venture capital funding over the course of the year.
Surely international VCs know about the following Australian VC deals?!
Australian Venture Capital Deals
Five of the Top Venture Capital Investments in FY 2020/21
Company :||: Deal size (USM$) :||: Industry
- Airwallex :||: $100 :||: Financial Software
- Brighte :||: $100 :||: Specialized Finance
- Athena :||: $90 :||: Consumer Finance
- SafetyCulture :||: $73 :||: Business/Productivity Software
- Canva :||: $71 :||: Multimedia and Design Software
If you’re co-founders in a Startup Incubator in Sydney and want to raise large sums of capital, the above points to Fintech business models as being the clear favourites.
Five of the Top Seed Round Startup Investments in FY 2020/21
Company :||: Deal size (USM$) :||: Industry
- Honey :||: $12 :||: Property and Casualty Insurance
- Nourish Ingredients :||: $11 :||: Food Products
- Carted :||: $10 :||: Social/Platform Software
- Pyn :||: $8 :||: Communication Software
- Vitruvian :||: $6 :||: Recreational Goods
If you’re co-founders in a Startup Incubator in Sydney and want to raise early-stage capital, the above is NOT concentrated on Fintech business models.
Bigger Deals get the Green Light
My presumption is that this applies to both local and international VCs.
The report also revealed a record 327 Australian venture capital investment deals over the financial year between 1 July 2020 and 1 July 2021. This was an increase of only 5% over the previous year, when 311 deals were recorded.
In Summary…
There was a 28% increase in venture capital funding but only a 5% increase in deals done.
BIGGER is better – Venture Capital is being invested into bigger rather than smaller startups. Anecdotal evidence suggests that for co-founders in a Startup Incubator in Sydney wanting to raise pre-seed funding, it’s exceptionally difficult in the current market.
Psychology of Australian Venture Capitalists
“No one wants to go first”, one source in the early-stage startup world recently pointed out.
Building on this point, the Preqin & Australian Investment Council Yearbook 2021 indicates a record figure of $27bn in ‘Dry Powder’ sitting on the sidelines of the Australian private capital market. Moreover, $13bn of this relates to private equity and venture capital.
Getting this ‘Dry Powder’ off the sidelines and onto the field continues to be a major challenge for Australian startup co-founders, particularly those looking for smaller amounts of ‘Dry Powder’.
Co-founders in a Startup Incubator Sydney
Certainly, Mr Yum’s timing couldn’t be better given a QR code food ordering system boomed during COVID. At AppCurate we continually encourage our startups to build their MVP BEFORE raising early-stage capital.
Here are 3 articles from AppCurate that will help co-founders:
- Raising Capital and Dilution Hell
- What Helps a Startup Stand Out to Investors?
- The Hot Dog Innovation that Failed
Startup Incubator Sydney
If you’re co-founders in a Startup Incubator in Sydney and want more information on capital raising email us at info@appcurate.com. Let’s together craft a pitch deck, raise capital and get on a Faster Path to Commercialization and you’ll end up tapping that ‘Dry Powder’ sitting on the sidelines.