The Australian Startup Ecosystem

The global startup community saw $157.1B in investment across 7,687 deals in quarter two this year, according to the KPMG Venture Pulse Q2 2021 report. The Australian startup ecosystem recorded around $2.5B in investments over the last 12 months and the highest quarter of VC investment ever in Q2'21. Some even say Australia is slowly closing in on Silicon Valley.

The issue is that many startups, especially early-stage companies, often haven't set up or don't maintain their Crunchbase accounts etc. I don't blame them as building a fantastic team and the product requires a lot of energy and focus. The result is a fragmented landscape. That is why I decided to analyse the Australian Startup Landscape.

Overview

Over the past few weeks, I collected data regarding the founding and funding history of 144 Australian based or founded startups across 28 industries. The sample is random and industry-agnostic.

Nineteen companies were founded before 2010, seventy-six between 2010 and 2015, forty-three between 2016 and 2019 and three each last and this year. 

More than 25% (37) of the sample are Fintech companies. HR/RecTech (17) and MarTech (17) represent around 12% each. Business Productivity (10), E-Commerce (9), and HealthTech (9) represent a bit more than 6% each and EdTech (7) and PropTech (7) around 5%. More than 20% of the sample consists of companies out of various industries, e.g. Aerospace, AgTech, Food, Pet Food, Cyber Security etc. 

We can expect to see more growth in FinTech, HR/RecTech, MarTech, HealthTech, AgTech and Business Productivity within the next 12 months. COVID will continue to accelerate technology adoption across all industries. Furthermore, investors start to focus more and more on sustainability and solutions which address climate change. It will be interesting to see how it will change the startup landscape. However, further research is required to provide more accurate insights into the different sectors. 

Founders

Founding a company is one of the biggest challenges in business, if not in life. Therefore, 75% of the founders decided to found the company with at least one additional co-founder. 

Most startups consist of a team of two co-founders (43%), almost a third (27%) consists of three or four founders, a quarter (25%) are single founders and only 5% consist of a team of 5 or more founders. 

16.6% (24) of the companies in the sample are founded by a female or have at least one female co-founder. In those, females are in 71% (17) part of at least a team of two. In 29% (7) the females are single founders.

In my opinion, it does not matter if a single person or a team founds the company. Because building a business is a team effort anyway. Therefore, founder(s) need to be able to attract and retain talent, especially these days with a workforce that becomes more and more purpose-driven. Thus, an important question is: "What kind of leader(s) is/are the founder(s)?"

Founders themselves are a massive topic. In my opinion, the gender, age and/or race of founders don't matter only the capabilities, experiences, personality etc., do. To cover this extensive topic more in-depth, I will reserve it for a future article.

Founding and Funding

The companies in the sample are, on average, since 7.3 years in business, raise every 2.2 years capital and have closed 3.14 rounds.

The PropTech (8.85 yrs), e-commerce (8.3 yrs), business productivity (8.3 yrs), EdTech (7.85 yrs), HR/RecTech (7.64 yrs) and MarTech (7.41 yrs) are slightly longer in business than the average business in the sample. It will be interesting to see how the picture changes with a larger sample. 

The companies raised slightly more than $9.6B in 452 rounds across all stages. Furthermore, twenty companies conducted an IPO, three an ICO and eight got acquired. Given that FinTech is a core pillar of the Australian Startup Ecosystem, they secured over 50% of the total funding. However, e.g., Judo Bank distorts the picture (total funding $1.8B) even within the sector. 

Interestingly, four companies used Equity Crowdfundings to secure more than $13M over multiple rounds. I expect to see more Equity Crowdfunding shortly as it gained in popularity.

I will provide an in-depth analysis of the funding history by industries in a future article since it is a huge topic itself. 

I update my database every week and aim to collect more data from early-stage companies, but I also need your help. Therefore, I encourage founders to set up their Cunchbase accounts (and to keep them up to date) and to keep sharing their funding/business successes! Keep on hustling!

What is your opinion on the Australian Startup Ecosystem? Are the days of Silicon Valley counted and who will be leading in the future?

Useful links and previous articles

• KPMG - Q2'21 Venture Pulse Report
• Buy now, Pay later a Snapshot