The DEI backlash is starting to bite into Australian startup funding
New data shows HR tech and edtech are hit hardest, but impact startups focused on social and environmental issues are proving more resilient.
Australian people-focused startups in the HR tech and edtech sectors are experiencing a sharp decline in funding amid a global backlash against diversity, equity and inclusion (DEI) initiatives and rising investor caution over long sales cycles and tightening customer budgets.
But local 'impact' startups attempting to solve other environmental and social problems are proving far more resilient with capital still flowing freely into climate tech and health tech sectors.
Those are two of the key conclusions to draw from a new report by venture capital fund Giant Leap.
The survey, produced jointly with startup data provider Cut Through Venture found that technology startups in the HR and DEI space saw investment drop from $535 million to $155 million between 2022 and 2024, with annual deal numbers more than halving from 27 to 13.
