State of Australian Startup Funding 2021: A Year Like No Other
2021 was the year the Australian startup ecosystem earned its seat at the global table. Equity investment into Australian startups more than tripled to $10.1 billion across 682 announced deals, up from a $3.1 billion record in 2020. More capital was deployed in 2021 than in 2018, 2019 and 2020 combined.
This inaugural State of Australian Startup Funding 2021 report, published by Cut Through Venture and Folklore Ventures, is the first comprehensive look at the trends and issues shaping Australia's startup funding landscape. It draws on Cut Through Venture funding data and survey responses from more than 850 founders, professional investors and angel investors.
Executive Summary
The State of Australian Startup Funding 2021 report covers the full breadth of the funding ecosystem for the first time, from equity crowdfunding and angel investing through to the largest venture rounds, alongside venture debt, tech M&A, public markets and the gender equity gap.
The quarterly funding record fell three times during the year, the monthly record fell five times, and 2021 delivered the first months with $1 billion or more in funding, four of them. Every quarter in 2021 placed in the top four funding quarters of all time.
A Year of Records
$10.1B raised across 682 deals, a 208% increase on 2020's confirmed deal volume, with the true figure estimated closer to $11B once undisclosed rounds are counted.
More $100M+ rounds than the prior three years combined, and more $250M+ rounds than in the entire history of the Australian ecosystem. Twenty rounds cleared $100M.
The top 20 deals accounted for $3.9B, 25% more than all capital invested in 2020. The five largest rounds alone were worth $1.8B.
Average round sizes rose at every stage. Seed rounds grew 113% year on year, Series A 49% and Series B 36%.
Sector Investment Breakdown
Fintech led with $2.5B, 25% of all capital raised and four times the sector's 2020 total. Enterprise / Business Software followed with $970M.
PropTech / RealTech ($683M), MarTech / AdTech ($672M) and Biotech / MedTech ($574M) rounded out the top five, which together took 55% of total funding.
Blockchain / Web3 recorded 20 deals, up from one in 2020. Marketplaces, Social Media and DevTech each grew deal count seven to nine times.
Investors named Climate Tech (55%) and Fintech (32%) as the sectors they were most excited about for 2022.
Largest Deals of 2021
Simpro $479M, Rokt $458M, Judo Bank $284M, Canva $278M, Airwallex $274M
GO1 $273M, Octopus Deploy $223M, Scalapay $210M, Employment Hero $140M, Culture Amp $136M
The number of Australian unicorns reached an all-time high, and Australia recorded the largest increase in unicorns since 2015 of any country.
A Maturing Investor Base
891 investors participated in 2021 deals, up 87% on the 476 recorded in 2020.
Overseas investors participated in one quarter of all reported deals. Tiger Global was the most active international fund, and a global investor led the largest deal of the year.
88% of surveyed investors reported higher valuations and 70% reported more competition for deals. Half increased diligence pace and shortened time to term sheet.
90% of local investors expected activity to increase in 2022, with 61% expecting a significant increase.
Gender Equity Gap
Teams with at least one female founder took part in 19% of deals, up marginally from 18%, and received 22% of total funding, down from 28% in 2020.
Just 2% of capital went to female-only founding teams. Five of the ten largest deals involved mixed founding teams.
Participation was strongest at the earliest stages, with 29% of accelerator, angel and pre-seed deals involving a female founder.
A confidence gap emerged in the founder survey. 63% of male founders were highly confident of raising their next round, against 10% of female founders.
Deep Dives by Funding Type
Angel and Crowdfunding Investing
Survey of 283 angels. 92% invest through an organised group, 84% have worked at a startup, and 83% are men.
75% expected to invest the same or more in 2022. Only 19% believe the sophisticated investor test is fit for purpose.
Venture Debt
A new wave of local and international debt providers emerged to fill gaps left by traditional lenders. Providers who shared data saw loans deployed rise 110% to 240% year on year.
Founder awareness remains low. 41% of founders surveyed had never taken on debt.
Value Creation and Exits
A record 202 tech acquisitions worth $10.8B, led by the $2B acquisition of VC-backed A Cloud Guru. Global buyers accounted for 69% of deal value.
185 listed Australian tech companies with a combined market cap above $123B, though 10 of the 12 tech IPOs in 2021 were underwater by year end.
Outlook for 2022
Investors and founders alike entered 2022 with confidence. Investors expected to deploy more capital, faster, and to see more global names on Australian cap tables. Founders were confident the funding they needed was available, with 70% highly or somewhat confident of closing their next round.
Read the Full Report
Gain access to the most complete data set and insights into Australia's startup investment landscape in 2021. Understand where capital flowed, which sectors thrived, and how founders and investors were positioned for the year ahead.
Later annual reports
- State of Australian Startup Funding 2022
- State of Australian Startup Funding 2023, $3.5B across 413 deals
Browse every report on the Insights page.
