Who — and where — are Australia’s VC funds? And where do they get their money from?
Venture capital investment in Australia has exploded since 2003. But who and where are the investors? And which industries are benefitting?
From $8.2 million invested in 2004, to $1.3 billion in 2020, the rise in venture capital investment in Australia has been staggering.
It matches similar trends globally, with venture capital investments worldwide almost tripling between 2010 to 2019, from $US39.6 billion to $US154.2 billion, according to the OECD.
In an article for SmartCompany Plus yesterday, data journalist Lisa Cornish produced a comprehensive breakdown of every dollar invested into venture capital funds in Australia, since the first few were registered in 2003, including data visualisations featuring contact information for all of the funds.
As a rule, institutional investors from Australia tend to pour their cash into early-stage venture capital limited partner (ESVCLP) funds, while other venture capital funds (VCLPs) are more likely to secure funding from international sources.
As Cornish explains in the piece, “more than 41% of VCLP investors can be found in the Americas – Bermuda, Canada, the Cayman Islands, Saint Vincent and the Grenadines, the United States and the Virgin Islands are among these investors registered locations. Geographically, VCLP investors are more diverse.
“There is a stronger representation from East Asia and the Pacific, Europe and Africa. But international early stage venture capital investment is growing faster than other venture capital investment, a trend that should see the footprint of ESVCLPs continue to grow and spread.”
Geographically, there is a clear bias towards New South Wales. Close to two-thirds of Aussie ESVCLPs and VCLPs are based in New South Wales, with most of them centred in Sydney and the surrounding areas.
Incredibly, the Northern Territory is a black spot for venture capital investment, with zero ESVCLPs or VCLPs registered in the region.
Where is the money going?
As for which industries are receiving the most funding, Cornish says the popular sectors are “constantly changing”.
That means, for businesses operating in any particular sector, the door is never really closed. However. early-stage funding tends to be focused on information technology investments. About $11 million was invested in this sector in 2011-12, which increased to $123 million in 2019-20.
“But, the most recent year of data shows a drop from $132 million in 2018-19 – the first decline in IT investment,” Cornish writes.
“This drop allowed for growth in funding for startups supporting the health, manufacturing and services sectors as ESVCLP investment diversified.”
