“Perfect storm”: Startup funding in ANZ topped $10 billion in 2021

Startup funding in Australia and New Zealand hit more than $10 billion in 2021, more than double the figure recorded for 2020.

That’s according to preliminary data from Cut Through Venture, a newsletter tracking startup ecosystem funding data in the ANZ region.

And Chris Gillings, publisher of the newsletter and database, estimates that the true value could be as much as 15% to 20% higher.

That’s partly because deals closed in the final weeks of the year may not have been publicly announced yet, and partly because many angel and pre-seed deals tend to go unreported.

The majority of the local funding came in the second half of the year. Q1 2021 saw $1.5 billion invested and in Q2 this increased to $1.8 billion.

In Q3, however, that doubled, with $3.6 billion invested. In September, more than $1 billion was announced in Aussie startups in one eight-day period alone.

Funding remained strong in Q4, with a total of $3.3 billion invested in ANZ startups.

ANZ’s year of startup mega deals

We saw a string of ‘mega-deals’ in 2021, with Cut Through Venture recording 75 deals of more than $50 million.

The largest of these were SimPRO’s $487 million raise and Rokt’s $458 million Series E, both announced towards the end of the year. We also saw Judo Bank announce a $284 million raise in January 2021.

In fact, the 10 largest deals of the year all topped $100 million. They included Canva’s $273 million raise, which valued the business at $55 billion; Go1’s unicorn-making $272 million Series D; and Octopus Deploy’s $223 million round, which came after 10 years of bootstrapping.

Airwallex’s $276.5 million Series E in September was also one of the largest rounds of the year. The Melbourne startup later tacked another $137.5 million onto the round, bringing it to a total of about $414 million.

Gillings puts all of this down to a “perfect storm” in 2021.

“There were more world-class Aussie and NZ startups than ever, local VCs with more capital to deploy than ever, and an ANZ market flooded with international startup investors,” he tells SmartCompany.

“Those ingredients led to a year of startup funding activity unlike anything we’ve seen before.”

In the past, large amounts of cash flowing into later-stage rounds has tended to correlate with a decrease of funding for early-stage startups. However, 2021 also seemed to be the year that disrupted this pattern.

While deals in the 10s-of-millions came thick and fast, we also reported on many, many deals around the $1 million to $5 million mark, and heard from several startups securing their first few hundred-thousand too.

No slowdown in 2022

So far in 2022, we’re not seeing much of a change of pace. Last week, Dovetail announced its $87 million raise and Milkrun raised $75 million after launching just four months ago.

Milkrun’s round was led by US investment giant Tiger Global Management, which also last week poured $28 million into TradeSquare, marking a continuation of global interest in Aussie and NZ tech.

“Name a leading global VC, and I’ll bet they made an Aussie or NZ investment last year,” Gillings says.

“And if they didn’t, they now have scouts down here hunting for opportunities.”

However, while he expects to see another record-breaking funding year for 2022, he warns that the sky-high valuations we’ve been seeing may not be sustainable.

“If the public market tech correction continues past Q1, then you’ll almost certainly see private valuations snap back to reality too,” he says.