US$6bn year for Australian VC investment in 2022


Despite a global slowdown in venture capital activity, investment in Australian startups hit a record US$5.84 billion – up 2% from 2021. If accounting fintech Hnry’s latest funding round is anything to go by, the investment bonanza could continue.
Aerial view across suburb of Drummoyne with Victoria Road, Parramatta River and east toward Sydney city on the horizon.
Australian startups banked nearly US$6bn in 2022. Image source: Andrew Merry [Moment] via Getty Images

Australian startups still banked a whopping US$5.84 billion in 2022, despite global venture capital falling from $730.5 billion to $493.6 billion in 2022, KMPG’s Venture Pulse data shows. Multiple startups, including Airwallex, Immutable and Scala Pay, raised over $100 million, but overall deals fell to 623 from 735 in 2021.

“This shows that dry powder is still being deployed – what’s changing is the way it’s being invested,” Amanda Price, head of high growth ventures at KPMG, says.

“As we move into 2023, VCs are increasingly looking for startups that are efficient, responsible with capital, and focused on revenue. When they find them, they’re willing to invest just as much as they have before, if not more.”

Australia’s fastest-growing accountancy fintech, Hnry, is testament to this. The company just completed a $35 million Series B round, lead by AirTree Ventures, Athletic Ventures and existing investor, New York-based Left Lane Capital. This takes the startup’s total funding to $60 million.

L-R, Karan Anand, managing director of Hnry Australia; Hnry co-founder James Fuller; Hnry co-founder Claire Fuller. Image source: Supplied.

Hnry launched in Australia in 2020 as an all-in-one digital accountancy platform and, in the last 12 months, claims its tripled revenue and nearly quadrupled its customer base. The company plans to use the fresh capital to double its headcount, expand internationally and invest in further product innovation.

“The elite Hnry team and growth trajectory of the business make it highly investible,” Matt de Boer, managing partner at Athletic Ventures, says. “The product itself also resonates deeply
with our athlete investors; independent earners are like athletes in that both have to be
single-minded in their focus.”

Globally, venture capital investment fell for the fourth consecutive quarter in Q4 2022, from $102.2 billion and 9,767 deals to $75.6 billion and 7,641 deals. This is the lowest level since Q2 2019.

The US recorded the largest proportion of investment with the largest deals being Anduril ($1.48 billion) and TerraPower ($830 million), followed by Asia, with top deals including GAC Aion ($2.56 billion) and SHEIN ($1 billion).

Looking ahead, KPMG expects the IPO window to remain closed well into 2023, and an increasing number of down rounds and mergers and acquisitions.

“Globally, we continue to see downward pressure on valuations in early 2023, leading many companies to postpone fundraising efforts in hopes of better times ahead,” Price says.

“However, these companies can only hold off so long and we anticipate an increase in down rounds during the first half of 2023 as companies begin to exhaust cash reserves.”