Last month, one of our partners, Peter Huynh, joined in a panel discussion hosted by Spark Festival. Spark Festival is Australia’s largest event connecting businesses, innovators and startups, to grow the digital economy. The panel, titled “Global Trends in Startup Funding”, discussed the following topics:
- How is venture capital activity in the Australian ecosystem evolving?
- What does this mean for international investors looking for the best opportunities in ANZ?
- What are key trends founders should be aware of?
The panel included other figures in the Australian and APAC VC space, namely Michael Tolo, Principal at Blackbird Ventures; Shwetank Verma, Partner at Leo Capital; Jason Atkins, Co-founder at Cake Equity; Lauren Capelin, Principal at Startmate; Elicia McDonald, Partner at AirTree Ventures.
Venture capital activity in the Australian ecosystem
Australian VCs have been investing a record amount in 2021, says Jason, who pointed out that nearly US$ 4.3B worth of VC funds was invested in Australian startups year to date. Jason has also noticed venture debt becoming more normalised, as part of a larger global trend. Moreover, there has been a 60% increase in 2021, in the size of each round. This is welcome change from recent years, where the number of deals in early-stage rounds have been declining. On the exit front, the number of tech IPOs in Australia have jumped from 8 in 2020 to 25 in 2021, signalling improving exit prospects for investors, says Jason.
Elicia echoed this sentiment, highlighting that venture capital funding has increased 6x, from USD200M in 2014, when she started the AirTree fund, to USD1.2B in 2020. She has observed a drastic increase in both the quality and quantity of startups in ANZ, matching the increase in funding. Founders from early breakout tech companies now have the ambition to lead their own startups and give back to the next generation through both capital and expertise.
Impact from international investors
Michael hinted at the extent of interest from international investors, thus validating the quality of local startups being amongst the best in the world. Domestic venture capital should not rest on their laurels, says Michael, who also highlighted the need for domestic investors to improve the quality of their offering to founders, to be more thoughtful and understand founders deeply.
Shwetank, whose fund invests primarily in India and has made regional investments, highlighted that the opportunity for B2B players such as Canva is still large. In particular, Shwetank is intrigued by the emerging B2B SaaS scene.
Key trends founders should be aware of
As a regional fund that focuses on data, AI, and software in Southeast Asia, Peter highlighted that the venture capital firm Qualgro still looks out for the same qualities in founders, regardless of where they are based. These qualities including making full use of resources available to them, to achieve as much as possible and to execute sharply. Peter also echoed the level of ambition increasing amongst many founders, especially those from India. Indian SaaS startups have shown a high degree of expertise in handling the customer journey and lifecycle, with customers from the US, Europe, and other parts of Asia.
Elicia and Shwetank also highlighted that competition for talent is also fierce, and that investors are paying closer attention to whether a founder can attract and retain talent. Shwetank emphasised the importance of building a sense of purpose and common goal, which transcends any form of remuneration.