Investment in Australia
► Investment preferences in the Australian technology sector have changed in many ways. Angels and VC investors are currently interested in the emerging new technology sector with many deals in this field taking place in Australia. Australian startups have nearly doubled their average raise size for growth rounds in the past 5 years but are ranked 7th in the global market (source1, source2).
► VC's in Australia have put attention to their portfolio construction and its diversification in terms of sectors and geographies. They are also looking for opportunities for co-investment to reduce the risk of their investment.
► Global VC’s may consider shifting their focus onto the Asia market and away from the traditional markets such as North America and Europe. Sectors that are witnessing changing trends are remote heath solution, agri-food, education technology, logistics, clean energy, and more.
► In the past five years, global interest in Australia’s innovation industry is growing as 64% of Australian private equity and venture capital (VC) funds come from offshore investors (source). As Australian technology asset class starts to mature, it is expected that foreign investment in Australia‘s innovation will continue to grow.
► The Australian agricultural sector is the least subsidised globally. Despite this, Australian farmers are one of the most efficient agricultural producers in the world and are open to engaging in innovation and this will drive productivity growth of the sector.
Tips and Tricks for Approaching VC's/Investments
► To understand investor’s preferences (in terms of the business sector, stage and geography), startups should identify their portfolio and recent deals. It is advised to try to think from the investor’s perspective to understand their position and their ultimate need.
► It is also very crucial for startups to understand the essentials which are to be included when preparing for documents. One of the basic document requirements is the business plan which outlines the problem, solution, target market, business model and strategies. Other details to be comprehensively included is how much funding is required, the allocation of required funds and the forward projection with the funds.
► Startups also should be aware of the type of funding received, whether it is dilutive funding (e.g., convertible notes) or non-dilutive funding (e.g., grants). Funding opportunities need to be carefully assessed whether startups need it now or at another point in time and whether their business model and traction are ready to receive the funding. In the case when a startup already has a relatively strong engagement with the market, bootstrapping could be another option to consider.
Overall, we are confident in the Australian ecosystem’s ability to adapt to a more efficient environment that results in more high-quality startups and enables us all to come out the other side stronger. There are many types of organisations based in and outside of Australia that are interested in supporting and boosting the ecosystem. The wheels of innovation are certainly still turning and evolving, and the disruption brought by the pandemic can train us all to be more resilient for the future.
This is the 2nd and final part of the HQ Boardroom Discussion with Artesian: The Future Innovation in Australia Blog. Read Part 1 here.
Contributors: Andrea Flair Nathan and Lucy Kim