Investors in the US pursue the supposed existence of 'kangaroo-unicorns' within a $420 million Australian venture capital fund
In the wake of Figma's recent IPO, rumours about Canva, a graphic design software maker, entering the public market are circulating. This trend is indicative of a broader movement: the increased interest of global capital in Australia's burgeoning start-up scene.
Airtree Ventures, an Australian venture capital firm, has just closed a $420 million fund. More than half of this fundraising came from international institutional investors, marking a significant increase from the less than 10% of international funding in Airtree's previous fund. The new fund will be used for seed funding for early-stage start-ups and investment in Airtree's existing portfolio companies.
The fundraising is not an isolated incident. It's the latest sign of global capital targeting Australia's start-ups. Institutions like MetLife Investment Management, the Harvard Management Company, the University of Wisconsin's endowment, and Australia's powerful superannuation funds have shown their support.
Australia lags behind countries like Canada and Singapore in terms of the amount raised at the seed stage and $15mn-$100mn stage. However, this might be changing. The country's advanced digital infrastructure, strategic geographic positioning, a supportive regulatory environment, and a strong startup ecosystem are collectively contributing to the sector’s rapid growth and global appeal.
Factors driving this growth
Digital Infrastructure Investments
Amazon Web Services (AWS) alone plans to invest A$20 billion between 2025 and 2029 to expand data centers and digital capabilities across Australia. This investment will enable advanced AI applications and boost productivity. Other major players like Microsoft Azure and NextDC further strengthen this infrastructure.
AI and Deep Tech Focus
AI is recognized by the Australian government as a critical technology expected to contribute up to A$600 billion annually to GDP by 2030. The country is increasingly becoming a hub for deep tech startups, with unicorns and venture capital surging, fueled by a regulatory framework that supports innovation and foreign investment.
Strategic Location and Resources
Australia’s proximity to Southeast Asia, abundant renewable energy resources, and stable legal system make it an attractive hub for hosting data centers and digital services for the region, including the concept of ‘digital embassies’ that securely store foreign data on Australian soil.
Supportive Government Policies and Funding
Initiatives such as the National Reconstruction Fund and alignment with global accelerators, combined with efforts to modernize laws (e.g., copyright) to facilitate AI innovation, create a conducive investment climate.
Emphasis on Diverse Tech Infrastructure Providers
Australia aims to avoid over-dependence on a single provider to maintain competitive pricing, greener energy, local skills development, and national sovereignty, which draws a wider range of global investors.
John Henderson, a partner at Airtree, stated that Australia's tech scene has reached "critical mass" with 43 "unicorns" (start-ups valued at over $1 billion). The focus on the poster-child companies of the Australian tech revolution will shift from Atlassian and Canva to Airwallex, SafetyCulture, and a slew of emerging companies.
HSBC recently announced the launch of an "innovation banking" service for entrepreneurs in Australia, further indicating the growing interest in the Australian tech sector. Henderson predicts that the "floodgates will open" for early-stage funding in Australia.
However, Matt Bright, a lecturer at the University of Sydney Business School, stated that Australian early-stage investors are more conservative than those in the US. The stagnant listings market in Australia has limited the options for early backers to exit their investments. Bright's statement suggests a move towards more funding for start-ups that are on the path towards achieving "kangaroo-nicorn" status (start-ups valued at over $1 billion).
Overall, the synergy of infrastructure investment, innovation-friendly policies, strategic regional positioning, and a growing ecosystem of deep-tech startups is positioning Australia as a premier destination for foreign investment in the technology sector.
- The increased global interest in Australia's startup scene has led to a significant funding of A$420 million by Airtree Ventures, with more than half coming from international institutional investors.
- The Australian government recognizes AI as a critical technology, contributing up to A$600 billion annually to GDP by 2030, and the country is increasingly becoming a hub for deep tech startups.
- The launch of HSBC's "innovation banking" service for entrepreneurs in Australia is another indication of the growing interest in the Australian tech sector, suggesting a future floodgate of early-stage funding.
