COVID-19 drives down global VC funding — but Australia and New Zealand stay strong

While COVID-19 has seen venture capital funding dip on a global scale, the Australian and Kiwi markets are faring relatively well, according to a report from Crunchbase.

The report — The State of Global Venture Funding During COVID-19 — found that global venture funding is down in the first half of 2020, compared to 2019, but only by 6%.

However, the figures are skewed somewhat by Indian telecommunications company Reliance Jio, which raised a whopping US$15.2 billion ($21.12 billion) round in a deal announced in June.

Without that anomaly, funding for the first half of 2020 would have been down by 17%, compared to last year.

Further, the report found that 66% of the funding raised was in later-stage or growth rounds, playing into a broader trend of funding going towards larger, or later-stage startups.

While the report didn’t draw any conclusion correlating the severity of the COVID-19 crisis with a dip in funding, it did find that both China and Spain had a particularly tricky six months. Both countries saw a five-year low in terms of venture funding.

Funding in China dipped by 33%, compared to the same time in 2019. Spain’s venture investment was down a massive 55%.

“However, given that China and Spain were two of the earliest COVID-19 hotspots, there’s a possibility those same effects are yet to come in the US and other heavily impacted areas,” the report says.

Conversely, however, the Australia and New Zealand markets, collectively, are growing, according to the Crunchbase data. Combined funding grew by 50%, compared to the first half of 2019.

In Australia, venture funding reached $927 million, up 39% compared to the same time last year.

Some 62% of that funding went into later-stage rounds, compared to 47% in the first half of 2019.

“In fact, the percentage of late-stage funding in Australia has increased rapidly since 1H-2016, when late-stage only accounted for 9 per cent of funding rounds,” the report said.

The findings mirror those reported in Right Click Capital’s Internet Dealbook, which tracks venture capital, private equity and angel funding in Australia.

While the value of investments was up in Q2 2020, the number of deals decreased, and the average deal size jumped from $7.6 million to $17.9 million.

Two of the quarter’s biggest deals went to startups in sectors that have been experiencing growth during the pandemic. Edtech startup GO1 raised $61 million in May, and design unicorn Canva raised $87 million in June.

The Crunchbase report also noted that four of the 10 largest round in the first half of 2020 went into workplace software companies (Canva, GO1, SafetyCulture and Outfit).

It also suggested that the fintech and neobank boom has contributed to the growth of the Aussie ecosystem — another four of the top 10 deals were investments into neobanks Judo Bank, Xinja, Volt and 86 400.

In New Zealand, however, the picture looks a little different. Kiwi startups secured $102 million in funding in the first half of 2020, marking a huge jump from $24 million in the same period of 2019.

All of the $102 million went to seed, angel or early-stage rounds, with 14% of that deployed into seed and angel rounds, the report found.

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