Almost $1 billion in funding for startups in the first quarter, but how many deals go undisclosed?
Friday, April 27, 2018/
There was almost $1 billion worth of funding events for Australian startups in the first quarter of 2018, according to a new report that shows a continued upward trend for startup capital across the country.
Techboard’s funding report for the March quarter of 2018 has shown Australian startups received $972 million in funding from various sources. This includes venture capital, debt financing, share placement, acquisitions, initial coin offerings (ICOs), initial public offerings (IPOs), crowdfunding, angel/seed investment, and grants.
This is the highest amount of funding for a single quarter reported by Techboard since the company began its reports and it matches other recent reports around the available funding for Australian startups. A KPMG report revealed Aussie startups received $167 million in venture capital funding in the first quarter, and StartupSmart analysed why $85 million of that was raised in the week before Easter alone.
Compared to the first quarter of 2017, significantly more funding was available this year. Last year’s first quarter saw just $330 million in funding deals, however, that report did not include companies based in Tasmania, South Australia, and the Australian Capital Territory.
From this year’s data, the largest funding event for any one startup was car-hire company Splend’s massive $220 million in debt funding to help the company head overseas and lock down more deals with car manufacturers.
For VC raises, unsurprisingly Canva’s massive $50.9 million raise not only took the podium as the largest raise, but also catapulted the startup to unicorn status. And for the emerging funding method of ICOs, stablecoin startup Havven took the cake with its massive $39 million capital injection.
Beehive startup Flow Hive was reported as raising the most via a crowdfunding method, however, it’s unclear if the $US14.9 ($19.7 million) shown to have been raised on the company’s IndieGoGo page is part of a separate funding round or an extension of its original $13 million raise in 2015.
The largest acquisition reported was for Elastagen, which was acquired by Botox manufacturer Allergan to the tune of $120 million. A number of female-founded startups also took home significant funding, including Canva, AgriDigital, intimate, and Honee.
These massive funding events skewed the data by sector, leading to travel and healthcare leading the pack by miles. Next in line was the fintech sector, and then adtech, crypto, and Internet of Things (IoT).
As for the war of the states, New South Wales again had the lion’s share of funding events, claiming $728 million worth, with Victoria and Western Australia trailing over $500 million behind. Queensland was at the bottom of the pile, reporting just $13 million in funding events.
According to Techboard founder and chief executive Peter van Bruchem, the significant funding amount reported sends a message that the startup sector should not be ignored.
“If there’s this amount of funding going in, think about how many jobs that’s creating. It’s something that deserves more attention than it’s getting,” he told StartupSmart.
Undisclosed deals prevalent
According to van Bruchem, the funding amount would be well over $1 billion if the value of “undisclosed” deals from across the startup scene were taken into account. The report lists some of these deals where the amount of funding has not been revealed, but he says there are also many smaller sized deals where no evidence of the deal is ever revealed.
“I’m never surprised to hear that a company has received investment and never disclosed it, as it happens particularly in the early stages when the investment amounts are in the low or sub-millions, or done by someone outside of the ecosystem,” he says.
“A lot of early-stage investments might not want to be disclosed by investors because of the risk it might all go bad.”
According to Right Click Capital partner Benjamin Chong entirely undisclosed deals do happen in the Australian scene, but not as often as you might think.
“In the beginning, the way we approached it is the deal would only be announced if the founder wants it and if it’s beneficial for the company. It’s helpful sometimes to announce funding if the founder and team want to attract more customers, or show existing customers they’ve got money in the bank,” Chong tells StartupSmart.
“In my experience, the times when founders don’t want to announce funding is when they’re working on something in the background, or they’re not wanting to attract attention for competitive reasons.”
What Chong is seeing is that more and more companies are reporting all their funding deals fairly quickly after being reported, and “generally speaking” deals in Australia do get reported, or people figure it out anyway. He says a “small minority” of deals would fly completely under the radar.
Van Bruchem believes any deals going unannounced is a bad thing; he claims it would further encourage both founders and investors to get involved if all deals were reported.
“Knowing the true extent of investment into the tech space would do nothing but encourage both investors to take a look at early stage tech investments, founders to look beyond visible venture capitalists for deals, and help policymakers paint a better picture of what’s going on,” he says.