The "State of Australian Startup Funding 2023" report offers a detailed, data-driven snapshot of the venture capital landscape in Australia. With input from over 1,000 founders, investors, and angels, the report unpacks a year of recalibration in startup funding following the highs of 2021-2022. It provides deep insight into market corrections, investor focus areas, valuation trends, and the evolving dynamics across sectors and demographics.
The Investment Climate in 2023
Market Contraction and Funding Volume
Total venture capital funding in Australia fell to $3.5 billion, across 413 deals, down 54% from 2022.
No new Australian unicorns were crowned in 2023.
Only 15 deals exceeded $50 million, significantly down from 54 in 2021
Investor Sentiment
70% of local investors expect greater international investor participation in 2024.
82% of founders believe they will successfully raise capital in the next two years.
Sector Highlights
Enterprise Software led in total capital raised: $505M.
Climate Tech topped the deal count with 41 deals.
Interest in AI and Big Data surged, with 30% of investors naming it their top sector.
Startup Resilience and Strategic Shifts
Operational Adjustments
90% of investors reported layoffs within portfolio companies.
Focus shifted to unit economics and capital efficiency.
Due Diligence Redefined
Growth projections grounded in financial models (67% priority).
Rigorous financial reporting (59%).
Stage-appropriate governance frameworks (55%).
Funding Stage Dynamics
Round Size and Valuation Trends
Angel + Pre-Seed rounds remained competitive: median deal size $925K.
Seed stage: stable median size at $2M.
Series A median fell to $4M, down from $7M+ in 2021.
Series B+ median dropped to $15M, a third of early 2021 levels.
Gender Equity in Funding
All-female teams participated in 12% of deals, while mixed-gender teams reached 26%—both five-year highs.
Funding still skews heavily toward male-led teams, especially in Series A and beyond.
Where the Capital Flowed
Top 5 Sectors by Capital Raised
Enterprise/Business Software: $505M
FinTech: $331M
Hardware/Robotics/IoT: $301M
BioTech/MedTech: $269M
Climate Tech/CleanTech: $268M
Declining Sectors
Blockchain/Web3 and Food/Beverage saw the sharpest drops.
Domestic vs International Engagement
International investors were involved in 42% of 2023 deals, down slightly from 47% in 2022.
Many later-stage rounds lacked the mega-fund participation seen in 2021-22.
LP appetite for new VC funds declined, with 73% of investors citing reduced LP interest.
While 2023 marked a reset for Australia's startup ecosystem, it also laid the groundwork for a more resilient and focused future. Startups that align their strategies with investor expectations—demonstrating capital efficiency, strong governance, and realistic growth paths—are best positioned to thrive.
Download the full report to explore:
- In-depth funding data by sector and state
- Insights from Australia's top venture capitalists
- Benchmarking tools for founders preparing to raise capital
