Aussie startups in 2025 had strongest funding quarter in years: report
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The news: Australian startups experienced their third biggest funding year on record, with the last quarter of 2025 seeing the strongest funding allocation since 2021, according to a new report by Cut Through Venture and Folklore Ventures.
The numbers: The fifth edition of The State of Australian Startup Funding Report found $5.1 billion in funding was raised across 390 deals, with more than $1 billion allocated to AI-native startups. The next largest segments were fintech, biotech/medtech and climate tech.
Median deal size increased across the board. Later stage deals saw increased activity for rounds between $20 million and $50 million, from 27 in 2024 to 42 in 2025. However, there were fewer raises above $100 million.
Startups with native AI technology saw greater success in fundraising in 2025, with companies building with AI in their stack attracting 61% of total funding.
The share of total deals with a female founder fell from 28% to 24%.
Meanwhile, 86% of 1,000 local founders surveyed said they were confident they will raise their next round, up from 76% in 2024, with most planning to in the next 12 months.
What they said: “2025 finished with a bang, delivering one of the strongest quarters of funding announcements since 2021 and signalling that confidence has returned to Australian venture capital,” said Cut Through Venture founder and Five V Capital managing director Chris Gillings.
“The AI wave has acted as the accelerant, not because 'AI' sells, but because it compresses time. Teams can ship, iterate, and prove value faster, which has pulled more companies into a fundable position earlier.
“At the same time, the investors’ filters have matured, having moved past novelty and rewarding defensibility, distribution, data advantage, and clear paths to monetisation.”
Folklore Ventures founder and managing partner Alister Coleman commented: “There is a growing optimism amongst Australian founders and venture capitalists that we are building something special. Yet in order to be successful, one must be preoccupied with the vision, rather than the approval. As a nation we need to ensure that founders’ bold visions are not squashed, watered down or taken for granted.
“Australia has an incredible talent pool of ambitious founders with big ideas, and quality operators that can deliver on these visions. We must continue to match this opportunity with a funding environment that supports the growth of technology companies and the gains to come from their success.”
The source: Cut Through Venture
