Funding for Australia’s start-ups and young technology companies rose 46 per cent year-on-year to $1.1 billion in the September quarter, dominated by raises for three fintechs, according to a study of 170 funding events.
Growth-oriented technology companies less than 10 years old are monitored for the study by Perth-based start-up data and directory provider Techboard.
A trend towards fewer, larger fundraising events was identified by Techboard, with five valued at over $50 million closing in the September quarter alone after only four occurred in the whole of 2017-18.
The largest was for Judo Capital, the “challenger bank” co-founded by former National Australia Bank business banking head Joseph Healy.
Christophe Hoppe, founder of Bausele watches, which has become the first private company to take advantage of amended legislation extending the retail equity crowdfunding regime to them. Supplied.
Its pre-revenue round of $140 million led by investors including Ironbridge Capital, Canadian pension fund manager OPTrust and Myer Family Investments was the second-largest in Australian start-up history after the $US250 million raised by Sydney-based email marketing firm Campaign Monitor in 2014.
The second-largest fundraising in the quarter was August’s placement for buy-now-pay-later platform Afterpay, which raised $117 million.
This placement, made before Afterpay has turned a profit, would once have been a traditional venture capital “C” or “D” round before the ASX’s recent campaign for technology scale-ups to list on it, noted Techboard co-founder and chief executive Peter van Bruchem.
The overall amount of public investment jumped markedly from the June quarter, with $357 million raised across three initial public offerings and 11 placements, compared to just under $100 million in the June quarter of 2018 and $150 million for the September quarter of 2018. The largest IPO was silicon battery maker 1414 Degrees, which raised $16 million.
However the quarter’s third-largest raise, the $109 million for cross-border payments and forex platform AirWallex, was a straight venture capital affair led by Chinese conglomerate Tencent Holdings, alongside Sequoia Capital China and Melbourne’s Square Peg Capital.
Initial coin offerings continued to disappoint, with a $26 million raising for crypto-banker Nauticus overshadowed by five other ICOs that fell well below their targets, raising less than $1 million.
Meanwhile equity crowdfunding continued the tepid start it has endured since it became legal for retail investors in September.
The quarter saw three equity crowdfunding investment rounds close, averaging under $500,000, less than half the 2017-18 average of $1.19 million.
Overvalued opportunities could be behind the lack of enthusiasm, suggested the founder of an Australian luxury watch brand currently seeking up to $500,000 on equity crowdfunding platform Birchal.
“I was an auditor at PwC, I’m conservative, so I used discounted cash flow to value my business,” said Bausele founder Christophe Hoppe of his offer, which is based on a $2 million pre-money valuation.
“I’ve sold 3500 watches. But I see others out there offering shares based on a $10 million valuation and they’ve done nothing.”