The Australian venture capital market kicked off 2025 with significant momentum, recording its strongest opening quarter since the peak of early 2022. Cut Through Venture's Q1 2025 Australian Venture Capital Funding Report provides a comprehensive analysis of this dynamic start to the year, offering crucial insights for founders, investors, and the broader tech ecosystem.
In Q1 2025, Australian startups announced $993 million in funding across 100 deals (including venture and accelerator rounds). This strong performance, carrying momentum from late 2024, saw healthy activity spread across all investment stages, from Pre-Seed to Series B+.
Positive Momentum & Improving Sentiment: Investor confidence and activity showed encouraging signs, though tempered by global factors.
Strong Start: The $993M raised marks the best Q1 performance in three years.
Investor Optimism: Sentiment improved notably from late 2024, with most investors reporting strong portfolio health and increased deal flow assessment. Fewer shutdowns andlayoffs were reported.
Fragile Confidence: Despite local optimism, concerns persist regarding global macroeconomic volatility and geopolitical instability.
Record Deal Sizes & Rising Valuations: Competition for deals pushed median funding amounts to new highs across the board.
All-Time Highs: Median deal sizes reached record levels across every funding stage (Angel/Pre-Seed, Seed, Series A, Series B+).
Series A Surge: The most significant jump was observed in Series A rounds.
Valuation Expectations: Investors widely anticipate valuations will continue to climb through 2025, particularly for early-stage rounds and AI startups.
Sector Focus: AI Leads Activity, Deep Tech & Diversification Shine: Investment spread beyond traditional software, with AI making its mark on deal volume.
AI Dominates Deal Count: For the first time, AI-first companies topped the deal count charts. However, the report notes that numerous small, quiet SAFE rounds in AI likely mean the true scale of activity is underrepresented.
Beyond Software: Sectors like Biotech/Medtech, Climate Tech, and Hardware collectively outpaced enterprise software deals, signalling broader investor appetite.
Funding Leaders: Biotech/Medtech led funding ($437M), followed by Climate Tech ($108M) and Healthtech ($80M).
Female Founders: Early-Stage Strength, Later-Stage Gap Persists: While early-stage participation was strong, funding for female-led ventures slipped overall.
Funding Share Declines: Just over 13% of total capital went to all-women or mixed-gender teams, below the multi-year average.
Later-Stage Underrepresentation: The gap is primarily driven by fewer large, later-stage rounds; only one deal over $20M included a female founder.
Early-StageActivity: Teams with at least one female founder captured nearly half of all funding at the Accelerator, Pre-Seed, and Seed stages.
A More Complex Funding Landscape: The Australian ecosystem is maturing, leading to morediverse funding structures beyond pure equity.
Venture Debt Rising: Increased availability and acceptance of venture debt as a strategic tool.
PE & Secondaries Active: Growing interest from Private Equity in later-stage startups (including minority stakes) and a return of secondary market liquidity.
Tracking Challenges: These trends, alongside numerous small, unreported SAFE rounds, add complexity to accurately tracking pure venture capital flows.
Why Download the Full Report?
This summary provides a snapshot, but the full Cut Through Quarterly Q12025 report offers invaluable depth and context, including:
Detailed analysis of funding and deals across all stages and sectors.
Comprehensive breakdown of female founder funding and participation data.
Full investor sentiment survey results on market outlook, valuations, andpriorities.
The list of the 30 largest funding rounds of the quarter.
In-depth partner insights on the global innovation economy, streamlining fundraising, people operations for investors, avoiding fundraising surprises,and a venture debt perspective.
Analysis of the evolving funding landscape complexities.
