According to Preqin’s Venture Deals Analyst, there have been 271 venture capital-backed investments in Australia since 2007, valued at an aggregate $1.4bn. As shown in the chart below, the aggregate deal value of venture capital-backed transactions surpassed the pre-crisis highs in 2012, when the aggregate value totalled $221m, and reached similar levels in 2013. At $482mn, 2014 YTD has witnessed the highest aggregate value of venture capital-backed investments recorded in any year between 2007 and the present, representing a 235% increase on 2007. Additionally, it is worth noting that the average deal size increased slightly more than two-fold from $4.9mn in 2013 to $10.7mn in 2014 YTD.
With regards to the breakdown of venture capital investments in Australia by industry in the period 2007 to 2011, healthcare was the most prominent industry, ranking first in terms of the number of deals made in Australia year-on-year. From 2012, however, there was a shift in venture-backed investments to the internet and software sectors. In 2014 YTD, the internet and software industries accounted for 38% and 23% of the number and 12% and 55% of the aggregate value of deals in Australia, respectively. The large proportion of aggregate deal value in the software sector was largely attributable to the $250mn investment made by Insight Venture Partners in the software company Campaign Monitor – the largest venture capital investment in Australia since 2007. Conversely, venture capital financings in the healthcare sector only accounted for 10% of the number of all deals made in Australia in 2014 YTD, a reduction of eight percentage points from 2013’s total. The aggregate value of venture capital investments have contributed 17% of the total value of all deals this year to date, compared with 23% in 2013.
With the current Significant Investor Visa programme (introduced in 2012) and a newly announced Premium Investor Visa scheme (to be introduced from July 2015) both aiming to attract more investments in Australian start-ups and infrastructure, venture capital-backed deal activity in Australia is likely to continue its current upward trend.