The first quarter of 2024 presented a mixed picture for the Australian venture capital market. While total funding showed resilience compared to the previous quarter, deal activity reached a multi-year low, signaling ongoing caution. However, signs of improving investor sentiment emerged. Cut Through Venture's Q1 2024 Quarterly Report offers a comprehensive analysis of these dynamics, providing essential data and insights into the Australian tech investment ecosystem. Understand the trends shaping startup funding and gain the intelligence needed for strategic decisions in 2024.
Q1 2024 Funding: Stable Capital, Fewer Deals
Australian startups raised $703 million across 66 deals in Q1 2024. While this total funding figure is a slight increase from Q4 2023, it represents a significant 49% drop compared to the $1.4 billion raised in Q1 2023. Key takeaways include:
Total Funding: A relatively stable start compared to late 2023, but well below thelevels seen a year prior.
Deal Count: The 66 announced deals mark the lowest quarterly count since Q3 2018,indicating a more selective investment environment.
Average Deal Size: The average deal size saw an increase, largely influenced by a smallnumber of larger, later-stage deals.
Investor Sentiment: Green Shoots of Optimism Emerge
Our Q1 2024 survey, incorporating views from 80 Australian startup investors, reveals a cautiously optimistic shift:
Market View: 43% of investors now view the funding market favourably, a significantjump from 20% in Q3 2023.
Valuation Outlook: Sentiment on valuations improved, with 61% expecting them to rise or remain flat, compared to only 40% in the previous survey.
Activity Expectations: Over half (57%) of investors anticipate increasing their deal activity in 2024.
Portfolio Advice: Despite growing optimism, caution remains; 72% advised their portfolio companies to prioritise internal funding rounds.
Sector Spotlight: Cleantech Leads, AI Remains Hot
Investment focus continued to evolve in Q1 2024:
Cleantech Surge: Cleantech captured the largest share of funding (27%), boosted by significant deals like SunDrive ($29M) and Element Zero ($15M).
Enterprise Software Dominance: Enterprise Software led in terms of deal count, reflecting ongoing demand for business solutions.
Investor Excitement: AI/Big Data remains the sector investors are most excited about (68%), followed by Enterprise Software (37%) and Healthtech (31%). Investor interestin Fintech continued its decline.
Female Founder Funding Faces Headwinds
Funding for female-founded startups saw a notable downturn in Q1 2024:
Funding Share Drops: Teams with at least one female founder secured only 7% of total funding,the lowest share recorded since Q3 2021 and a sharp fall from 27% in Q4 2023.
Deal Participation: Only 15% of all deals involved a female founder.
Deal Size Gap: No deals over $10M were secured by female-founded startups this quarter. The median deal size for female-founded teams ($1.2M) was less than half that of all-male teams ($3M).
Deal Size Dynamics: Early Stage Squeezed, Late Stage Returns
Funding trends varied significantly across different stages:
Seed Stage: The median Seed deal size fell to $1.8M, its lowest point since 2019.
Series A: Median Series A deals remained stable at $8M.
Series B+: The median for Series B and later stages increased to $20M.
Mega Deals: Deals over $50M made a return, led by Deputy ($111M) and GigaComm($50M), though overall late-stage activity remains subdued compared to historic peaks.
Go Deeper: Download the Complete Q1 2024 Report
Gain a complete understanding of the current Australian venture capital climate. Download the full Cut Through Quarterly Q1 2024 report for:
Detailed analysis of funding across Pre-Seed, Seed, Series A, and SeriesB+ stages.
Breakdowns of investor sentiment by investor type.
Full listings of top deals and active investors.
In-depth sector analysis beyond the highlights.
Comprehensive data on female founder funding metrics.
Expert commentary from industry partners Corrs Chambers Westgarth, HSBC, and GXE.
