The third quarter of 2024 presented a mixed picture for the Australian venture capital landscape. After a promising Q2, total announced funding saw a significant drop, settling at $695 million – a return to the levels seen in Q1 2024 and mirroring the slower pace of 2023.
However, this headline figure doesn't tell the whole story. The Cut Through Quarterly Q3 2024 report reveals that beneath the surface, deal activity remained robust, particularly at the early stages, with investor sentiment continuing its upward trend. Dive into the essential Q3 data and analysis covering funding trends, sector performance, valuations, investor sentiment, and diversity metrics.
Key Australian VC Trends in Q3 2024
Navigating the quarter required understanding several key dynamics:
Funding Drop, Deal Count Rises: The $695M funding total marked a pullback from Q2, primarily due to theabsence of mega-deals (no rounds over $100M were announced). However, the total number of announced deals (92 VC + 39 accelerator) surged to a five-quarterhigh.
Early-Stage Resilience: Seed-stage deals were particularly active, accounting for one-third of all non-accelerator investments. Deals under $50M remained near recent highs.
Investor Sentiment Improving: Confidence climbed, with 49% of surveyed investors finding the marketmore favourable than in Q2. 53% assessed more deals, and 58% rated deal flowquality as good or excellent.
Portfolio Health Concerns: Despite market optimism, investors reported increased instances of portfolio company layoffs and closures compared to Q2.
Valuations Stabilising: Valuations appeared steady compared to Q2, with the average estimated fall from peak pricing remaining consistent (around 33-42% depending on stage). 84% of investors expected valuations to hold steady for the remainder of 2024.
Sector Spotlight: Fintech Holds Top Spot, Climate Leads Volume
Investor interest and funding allocations showed consistency alongsidesome shifts:
Top Funded: Fintech maintained its lead for the second quarter running, securing $209M and accounting for four of the ten largest deals ($20M+). Enterprise/Business Software ($122M) and Climate Tech ($79M) followed.
Top Deal Volume: Climate Tech led deal count again (23 deals), though many were Accelerator rounds.
Investor Excitement: Enterprise/Business Software and AI/Big Data remained the top two sectors investors were most excited about. HealthTech climbed in investor interest.
Pervasive AI: While dedicated AI/Big Data funding ranked lower, 42% of all fundedstartups in Q3 mentioned AI on their websites, showing its integration acrosssectors.
Female Founders: Record Early-Stage Participation
Female founders continued to make progress, particularly at the earlieststages:
Record Pre-Seed/Seed: Participation by teams with at least one female founder hit a record 50% at Pre-Seed and a five-year high of 26% at Seed.
Accelerator Strength: 54% of announced accelerator rounds included female founders.
Later Stage Consistency: Participation in Series A and B+ rounds remained steady in themid-to-late 20s percentage range.
Funding Share: Overall share of funding dollars for female founders was 20% for thequarter.
Why Download the Full Q3 Report?
This quarterly summary provides the essential highlights. The full Cut Through Quarterly Q3 2024 report offers much more:
Comprehensive Deal Data: Full lists of funded companies, round sizes, stages, and investorsactive during the quarter.
Detailed Sentiment Analysis: Complete results from the Q3 Investor Sentiment Survey, tracking shiftsin confidence, priorities, and portfolio health.
Deep Dive Perspectives: Ecosystem insights on crucial topics like Deep Tech's potential inAustralia, navigating secondary pricing, and the importance of sub-scaleM&A.
Partner Insights: Expert commentary on due diligence best practices, compliancestrategies, and global VC trends.
Quarterly Context: Track funding, deal volume, and sector trends quarter-by-quarter.
