VC funding in Australia in 2019 rose to a record US$1.145 billion from US$1.033 billion in 2018.

Australia was a standout amongst the otherwise disappointing show in the Asia Pacific region where deal value declined to US$73 billion from $126 billion in 2018, said KPMG.

According to a report by KPMG’s Venture Pulse, VC investment in Australia during Q4 of 2019 was US$339.14 million. This was the highest quarterly amount in the last six years. Interestingly, the number of deals during the quarter was 32, the lowest in that same period. (Mirage news)

“Australia has bucked regional trends, which saw Asia remain the primary weak spot in the global VC market,” said Head of KPMG High Growth Ventures, Amanda Price. “We are seeing larger deal sizes across the board, a strong sign of the quality of venture-backed startups emerging from the local eco-system.”

Big-ticket deals in Aussie VC in 2019

These included Canva ($85 million, IT), Secure Code Warrior ($47.65 million, IT), Athena Home Loans ($47.38 million, Financial Services), Harrison.ai ($29 million, Healthcare), and V2 Food ($23.93 million, Consumer B2C).

In a significant observation, KPMG found that Aussie VC was undergoing a structural change – early-stage VC deals were losing momentum – indicating perhaps that early investment was seeing a shift out from VC and towards alternative funding avenues.

Outlook for 2020

The outlook for 2020 is likely to revolve around the following themes, according to KPMG’s Price:

• Hot sectors – AI, biotech, fintech, logistics, education, e-commerce, B2B services, 5G and deep technology innovation
• VC investors will focus on companies with sustainable global growth models…
• …and the profitability of investee companies
• Specialist platforms for niche needs of specific industries will attract VCs (e.g., RigUp)
• VCs will avoid cash-burners
• An uptick in exits and IPOs in advance of the US Pres elections
• The elections could unleash global political and economic uncertainty

“We are going to see companies, particularly consumer-focused companies, taking some time to put their financial house in order and to really prove the unit economics of their business models to investors,” said Conor Moore , Co-Leader, KPMG’s Emerging Giants Network. “Profitability or a clear path thereto is going to be a key success factor for IPOs moving forward.”

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