VC funding plummets again as mega deals remain elusive

The news: Australian startups raised $695 million across 92 venture capital deals in Q3 2024, according to the latest Cut Through Quarterly report. This represents a significant drop in funding compared to the previous quarter where $1.5 billion was raised, despite an increase in the total number of deals announced.

The numbers: Total funding fell to $695 million in Q3, down from a six-quarter high in Q2. However, the number of deals rose to a five-quarter high, with 92 venture capital deals and 39 accelerator rounds announced. Notably, there were no deals exceeding $100 million in the quarter, and deals over $50 million fell to a multi-year low.

The context: The funding decline was attributed to the absence of mega-deals over $100 million, which have significantly influenced quarterly fluctuations. Despite this, investor sentiment continues to improve, with 49% of investors describing the funding market as more favourable compared to last quarter. Seed-stage deals were particularly active, accounting for a third of all announced non-accelerator investments. Fintech maintained its position as the top-funded sector for the second consecutive quarter, while Climate Tech led in deal volume.

What they said: "As we enter the final quarter of 2024, many venture capital funds are laser focused on delivering cash returns," the report stated, noting that nearly half of VC firms are discussing exits more frequently than this time last year.