Venture capital financing at the start of 2023 may not have been as bad as many thought according to new analysis from Perth-based investment data firm Techboard.
Techboard released its March quarterly Funded report this week $1.01 billion in capital deployed in 111 deals. That figure is 50% higher than the $661 million for 82 deals in the Cut Through Ventures analysis released in early April.
Techboard CEO Peter van Bruchem declined to comment on why there might be such a big difference between the findings of the two venture data companies.
Based on the Funded figures, Q1 2023 was the slowest quarter for investment since $844 million in Q4 2020, and only marginally behind Q1 in 2021, but van Bruchem says prior to that period the only other time funding cracked $1 billion in a quarter was Q2 of 2020.
“Financing levels were quite subdued in March, due in part to the fallout from the recent Silicon Valley Bank collapse and a number of other factors, such as rising interest rates and cost-of-living pressures,” the Funded report said. report.
“In March 2023, Australian startups announced that they had collectively raised $204 million from 36 private rounds. This was less than half the amount announced in February, which saw $432 million raised from 47 deals, and even lower than the typically slow January, which saw $372 million raised from 28 deals.
The Australian result suggests that local startups actually do better when it comes to investment than their international counterparts, with US-based CB Insights finds global VC funding hit its lowest quarterly total since Q4 2019.
But van Bruchem says local monthly private financing tells a less positive story. While January funding levels were the second highest on record after January 2022, results for February and March were significantly worse, with February having the lowest funding level since 2020 and March having the lowest level since 2021, but lower than 2019.
“Analyzing deal data by deal size yields a number of insights. First, the profile of deals by deal size for March Q 2023 is almost identical to March Q 2021, but an analysis by deal label reveals far fewer deals at a later stage in March Q 2023,” he said.
“Comparing the current quarter to the immediately preceding quarters, we see declines in rounds across all deal labels, with the largest proportional declines in pre-seed and Series A. Declines were recorded across all deal sizes, but were most notable in the $1 million-$5 million and $20-$50 ranges.
Size of quarterly deals over the past four years. Source: Techboard
There was an overall decline in deal size across the board in stark contrast to the December quarter of 2022, when the average round sizes of the Series A and Series B increased from the previous September quarter.
Declines were recorded across all deal sizes, but were most notable in the $1 million-$5 million and $20-$50 ranges.
The good news in the Techboard report is that women-led companies secured a significantly higher share of total funding compared to the shockingly low numbers in Techboard’s Funding for women-led businesses report from last September 2022, which showed that in FY22, only female-led companies raised just 0.73% of all private funding, with 14.9% of funding going to startups with at least one female founder.
The Funding Update reveals that for March Q 2023, 4.64% of private funding went to companies with an all-female founding team and 25% went to teams with at least one female founder.
Four “mega deals” helped support the start of 2023. It was climate change agtech startup Loam that raised $105 million Series B; fintech Till Payments is pouring $70 million into a Series D just weeks after shedding 120 employees (founder Shadi Haddad stepped down as CEO immediately after the capital injection): US-based music licensing marketplace Songtradr, which is backed by WiseTech Global- founder Richard White, pocketed $68.7 million in a Series E; and Xpansiv, a carbon exchange marketplace, which is pocketing $181 million at a reported valuation of $2 billion.
Those investments were notable because March has historically attracted fewer mega deals than other quarters.
But as the world grapples with how to deal with climate change, it seems investors have decided to support the sector Climate tech startups, spanning agritech, cleantech, clean energy and eMobility, accounted for $354 million — 35% — of funding for the March quarter.
Fintech accounted for $192 million (19%) with healthtech startups raised $123 million (12%) of total funding in the quarter
The full March quarterly report is available at techboard.com.au
Quarterly deal size. Source: Techboard