The Australian venture capital landscape experienced a significant upswing in the second quarter of 2024, marking a potential turning point after a period of recalibration. Cut Through Venture's Q2 2024 Australian Venture Capital Funding Report delivers essential data and analysis on this resurgence, offering critical insights for founders, investors, and observers of the tech ecosystem.
In Q2 2024, Australian startups announced a striking $1.5 billion in funding across 99 deals. This represents the strongest funding quarter since Q4 2022, driven largely by the return of significant mega-deals and renewed investor activity across all funding stages.
Market Recovery & Improved Sentiment:
The quarter showed clear signs of life returning to the Australian VC market.
Funding Rebound: Total funding reached $1.5B, the highest since late 2022. Deal count also increased to 99, indicating broader activity.
Investor Optimism Grows: Sentiment continued its positive trajectory, with 46% of investors describing the market as more favourable compared to Q1. 42% reported assessing more deals.
Portfolio Adjustments: While reported layoffs decreased, there was a slight uptick in startup closures, suggesting ongoing market adjustments continue.
Mega-Deals Fuel Funding Surge:
Late-stage funding saw a notable comeback, significantly boosting the quarter's total.
$100M+ Rounds Return: Six mega-deals exceeding $100 million were announced, a frequency not seen since Q1 2022. This included major rounds for Beta shares ($300M), Hysata($172M - a record Climate Tech deal), CoverGenius ($120M), and Honey Insurance ($108M).
Mid-Stage Lag: Deals in the $20-50M range remained below 2023 levels, although a backlog of companies suggests potential for more large rounds later in the year.
Sector Spotlight: AI Leads Activity, Fintech Tops Funding:
Sector dynamics revealed distincttrends in activity versus capital allocation.
AI Deal Volume Leader: For the first time, AI-first startups recorded the highest deal count(16 deals). However, the report notes a gap between AI hype and fund ingreality, with modest average deal sizes ($5.2M) and cautious investor sentiment(57% of VCs made no AI-first investments in 2024).
Fintech's Funding Reign: Driven by three $100M+ deals, Fintech topped the funding charts with$546M raised.
Consistent Support: Climate Tech/CleanTech ($344M) and Biotech/MedTech ($142M) remained strongly supported, with most deals occurring at Series A or later stages, highlighting specialist investor focus.
Female Founders Face Headwinds Despite Early-Stage Gains:
The picture for female entrepreneurs was mixed, showing persistent challenges in later stages.
Funding Slump: Overall funding for female-founded startups dropped to its lowest pointsince 2019.
Early-Stage Participation High: Female founders achieved record deal participation at the Pre-Seed stage(45% of deals) and a five-year high at Seed.
Later-Stage Gap: Participation and funding dropped significantly at Series A and B+, with only three female-led startups raising over $20M in 2024 so far. Year-to-datemedian deal size for female-only teams ($1.0M) lagged significantly behind all-male teams ($4.0M).
Valuations Stabilising:
Median deal sizes remained relatively steady across stages compared tothe previous quarter, suggesting valuation stabilisation. While significant drops from peak pricing are still evident, most investors expect valuations tostay the same for the remainder of the year.
Why Download the Full Report?
This summary captures the headlines, but the complete Cut Through Quarterly Q2 2024 report provides indispensable depth and actionable intelligence, including:
Detailed funding breakdowns by stage, sector, and gender.
Analysis of valuation changes from peak pricing and future expectations.
The full list of the 30 largest deals of the quarter.
An update on Australian technology M&A trends.
In-depth partner insights on potential legislative impacts on angel investing, establishing robust treasury functions, security & compliance asgrowth drivers, and the future of VC.
Complete survey data on investor sentiment and priorities.
