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Despite a global lull in venture capital, local businesses attracted a landmark $5.84 billion in investment last year.
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Aussie start-ups secure record level of funding: KPMG
01 February 2023
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Australian start-ups secured record venture capital funding of $5.84 billion in 2022, up 2 per cent on the previous year, despite a decline in global investments.
Head of high growth ventures at KPMG Amanda Price said local companies had stood out from the pack to attract investment.
“It was another record year for venture capital investment in Australia,” she said. “Despite the economic cool down, deal value maintained its momentum in what was a standout result in 2021, although the volume of deals has decreased.
“To put this into context, overall investment in Australian start-ups has leapt 194 per cent since 2019 - and has delivered year-on-year growth every year since 2014.”
“As we move into 2023, VCs are increasingly looking for start-ups that are efficient, responsible with capital, and focused on revenue. When they find them, they’re willing to invest just as much as they have before, if not more.”
KPMG said the positive result flew in the face of the global venture capital trend, with investment falling from $730.5 billion to $493.6 billion in 2022.
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The Australian funding record was also achieved despite the number of deals falling to 623, down from 735 in 2021. But Ms Price said a number of start-ups raised over $100 million in 2022, including Airwallex, Immutable, and Scala Pay.
The energy industry attracted the most interest from venture capital, spurred by governments moving to prioritise energy independence and greener alternatives.
The landmark investment of $5.84 billion in 2022 showed how quickly Australian start-up activity had rebounded since the pandemic, when investment only reached $2.19 billion.
Globally venture capital investment dropped for four consecutive quarters in 2022, from $102.2 billion on 9,767 deals to $75.6 billion on 7,641 deals, marking its lowest levels since Q2 2019.
KPMG expected global venture capital investment to remain subdued in early 2023 with companies predicted to run out of cash and consumer-focused businesses facing most of the strain.
“Globally, we continue to see downward pressure on valuations in early 2023, leading many companies to postpone fundraising efforts in hopes of better times ahead,” said Ms Price.
“However, these companies can only hold off so long and we anticipate an increase in down-rounds during the first half of 2023 as companies begin to exhaust cash revenues.”
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