Quarterly VC funding hits $1.5b for the first time since 2022
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The news: Australian venture capital funding hit a six-quarter high in Q2 2024, reaching $1.5 billion for the first time since 2022, according to a Cut Through Venture report.
The numbers: The report, which collected data from 108 venture capital firms, angel syndicate leads and family offices, said the funding surge was driven by the return of mega-deals, with six startups raising funding rounds of over $100 million.
Total announced deals also bounced back, with 99 deals distributed across full spectrum of funding stages.
Investor sentiment continued to improve in Q2 2024, with 46% of investors describing the funding market as more favourable compared to last quarter. Additionally, 42% reported assessing more deals, and 30% rated the quality of deal flow as good or excellent.
Despite a record level of participation at 45% of reported deals at the pre-seed stage and a five-year high at the seed stage, Q2 saw a "dismal outcome" for female-led startups overall. Funding for female-founded startups slumped to its lowest level since 2019, with later-stage participation dropping significantly.
The number of deals exceeding $100 million in Q2 reached levels not seen since Q1 2022, with six "mega deals" announced. While promising, deals in the $20 million to $50 million range remain below 2023 levels. A significant backlog of startups that raised over $20 million in 2021 to 2022 without recent rounds suggests more large deal announcements could occur later this year, pointing to a potentially robust H2.
The AI sector achieved the highest deal count for the first time in Q2 2024, with 16 AI-first startups securing funding. Fintech topped total funding, driven by three deals of more than $100 million. Climate tech/cleantech and biotech/medtech remained consistently supported, with most deals in these sectors at Series A or later stages.
The context: Cut Through Venture, which provides insights and data on venture capital in Australia, said Q2 marked a "significant recovery" in the local startup funding landscape, delivering the strongest funding quarter since Q4 2022.
The resurgence reflected improved investor sentiment and sets up the potential continuation of this positive shift in the coming months, it said.
What they said: "The precarious start to 2024 gave way to signs of life returning to funding markets, with Q2 delivering the strongest quarter for Australian startup funding since Q4 2022," the report said.
"The funding level announced in Q2 would serve as the first real litmus test for investor activity in 2024, given most processes closed out in Q2 would have commenced post the 2023/24 summer break.
"The number of deals closed during the quarter also bounced back, which was particularly encouraging given that it was a quarter absent of any major accelerator cohort announcements."
The source: Cut Through media release
