Welcome aboard to the 1400+ new subscribers who join us this month. G'day to our 350+ international joiners, who stumbled across the State of Australian Startup Funding report. CTV's monthly email is a little shorter (and much less colourful) than the SoASF report, but the mission is the same: use data to help shine a light on the progress of the Australian startup ecosystem -- both locally and overseas.
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2nd biggest month ever.
The explosive start to 2022 continued into February, as we clocked the second-largest funding month on record. This is the first time we've seen back-to-back unicorn months, and as a result, 1Q22 is on track to be a record quarter.
Full disclosure, and for the sticklers in the room, ~40% of February's funding volume flowed to Scalapay; the "inspired by Afterpay" Woollongong startup that went backpacking in Europe last year and didn't look back. Despite having no market presence here in Australia, the Australian founded startup still employs a third of its workforce locally. An Aussie expat, but an Aussie nonetheless.
Aside from the Scalapay deal, deal sizes skewed smaller than what we've become accustomed to in recent quarters. Approximately 60% of all deals were less than $20M in value, and occurred at the Series A stage or earlier.
The Pareto principle did its thing, with the top 20% of deals accounting for 81% of total funding volume.
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Dollars spread across sectors.
Fintech and Enterprise/Business Software led the charge once again, however, the diverse sector mix of startups that announced funding in February was encouraging.
Hotspots included Hardware/IoT, Cyber/Digital ID, Web3, MarTech, and ClimateTech.
New South Wales had its first unicorn month, thanks in large part to Scalapay, which straddles the 'Gong and Dublin as its base. Australia's largest state also accounted for more than 50% of the funded deals.
Average deal sizes at all stages continued to trend higher than levels seen in 2021. Early-stage deals stood out: the average deal size at the Angel/Pre-Seed stage was more than double that seen last year. The average deal size at all other early rounds was up by more than 30%.
We're on our first-ever 'unicorn month streak', with February funding topping the mythical $1B threshold for the second time in two months. February was the second-highest funding month on record and clocked the fourth-highest deal count we've seen.
Pay it forward. CBA took out a 20% stake in Paypa Plane to ride the popularity wave of paying bills via direct payments without a debit or credit card. Australia's largest bank also joined a lengthy list of local funds to back OwnHome, which aims to lock renters on the homeownership path via a rent-to-own model. Fully-digitised receipt solution Slyp, famously backed by all four Big 4 banks, added several new investors to it's cap table, including well-connected retailers, the Leibovich brothers.
Perth-based PictureWealth raised a sizable Series A to support the scaling of its personal financial management solution. A few months after its most recent raise, SMB lender Lumi tapped its bench of investors for more funds to support fast-than-expected growth. The teenage founders of Instant, an ultra-fast checkout startup, found fans in a long list of top local and overseas funds and high profile angels.
And, our friends at VentureCrowd practised what they preach, raising a sizable chunk of its Series A on its own crowdfunding platform.
Eat clean, be clean. All G Foods, Eighth Day Foods, Change Foods, and Fenn Foods all raised to decrease our reliance on meat proteins. On the green and clean front, Trace raised a party round from more than 21 firms and angels to scale its SME carbon footprint management platform. Cecil, which automates and makes scalable the management of green natural asset projects, raised from several local funds. A mix of top-tier global and Australian funds invested in real-time flood forecasting platform Floodmapp.
Arkon Energy raised the largest known Aussie Pre-seed deal to date to help renewable energy providers monetise excess energy production via Bitcoin mining. Accurassi raised a strategic round to build out a consumer-facing renewable energy marketplace.
You think you know me. Australian-founded and now London-based OCR Labs raised a Series B to scale its frictionless customer on-boarding and data security solutions. Cyble, which monitors the dark web to identify if an enterprise's login credentials are exposed online, raised a Series A. CredShare raised to ensure credentials are shared and stored securely and in a way that complies with international data privacy laws.
Meanwhile, three PWC consultants took the plunge into startup life, spinning out proof-of-income verification platform Fortiro, with the financial backing of OIF.
Scalapay and EmployementHero entered the Aussie unicorn stables in February. Two other startups have already joined the herd in March too, bringing the Aussie unicorn tally to 14.
Scalapay's $692M round was a mixture of debt and equity. The exact split has been difficult to verify, so we won't declare the mega-round the official all-time funding record yet. We may also need to revise the headline figure for February downward once the equity component is confirmed. Valued at $1.9B, Scalapay is now the most valuable standalone Australian BNPL firm. Following recent public market volatility, Scalapay is valued roughly the same as all the standalone ASX-listed BNPL companies combined.
Employment Hero raised $185M in 2021, including $140M in July when Insight Partners joined the cap table. Airtree, OneVentures, and SEEK have been investing in the business since well before then, and continue to deploy capital into the business. Employment Hero, which offers SMEs a full suite of HR management tools, used part of the raise to acquire KeyPay, a workforce management and payroll platform.
Employee onboarding platform Enboarder raised its $45M Series B from a long list of mainly international VCs. The startup has raised $67M over four rounds since 2018, and the cap table has always skewed global. Local investors OIF invested in the startup's earliest institutional round in 2016.
Fellow workforce management software solution Lifelenz, raised from Ellerston Capital and Tidal Ventures to further expand its team and geographic reach. The startup's AI is used by large brands in the casual dining and retail sectors to forecast and optimise labour rostering. The startup has clients in Australia, NZ and North America, and will use part of the funding to push into Europe.
Accounting practice management platform Karbon raised a chunky $92M Series B from US investor Tidemark Ventures. The raise was a significant step up from their $13M Series A in 1Q21. Karbon's founders have had success in the space before, having sold a prior startup to Xero.
Twenty-three-years-young enterprise risk management software business Protecht raised its huge Series A from California based Arrowroot Capital.
A large portion of CTV's press coverage focuses on our female funding data analysis. And, rightfully so.In an attempt to cut through the noise of the wild month-to-month swings in the data, we'll now present the medium-term trends, measured by: i) rolling quarterly figures; ii) 2022 figures vs 2021 broken out by stage. We'll also focus on deal count rather than total dollars funded. Deal count is less subject to large swings caused by mega-deals, so we think it is more useful for ongoing tracking.The percentage of deals involving at least one female founder remains right in line with the average for the past two years. Female only founder teams made up ~50% of this group.The first two months of 2022 saw improvements across the Pre-Seed through Series A for female-led teams. With fewer than 200 deals tallied for the year, the data set is still too small to draw meaningful insight.
Excluding crowdfunding participants, 189 unique investors were reported as part of February's funding flurry. The most active investors were Global Founders Capital (Tiiik, Cecil, PropHero, OwnHome), Reinventure (Slyp, Instant, Kepler Analytics), Afterwork (OwnHome, PropHero, Blakthumb), Our Innovation Fund (Linkby, Mastt, Fortiro), Tidal (SocialSuite, Blakthumb, LifeLenz), Airtree (Reejig, Calven, Employment Hero), and Jelix (Truscope, Floodmapp, PropHero). In response to strong demand from our founder subscribers, we'll now feature a running list of newly launched startup investment vehicles. Much like our funding data, we'll compile this from publicly available information plus details submitted straight to us by funds. Submit your newly launched vehicles via email. - Feb '21 - King River Capital Web3 Fund - $50M - Feb '21 - Firemark Ventures Early Fund - $75M - Jan '21 - Airtree Seed Fund - $200M - Jan '21 - Airtree Web3 Fund - $50M - Jan '21 - Airtree Growth Fund - $450M - Jan '21 - Aussie Angels Syndicate Platform
That's it. Have a great month.– Chris