Startup funding continues to slow

Investors kept their wallets shut once again in August with Australian startups receiving a combined $225 million worth of funding over 32 deals.

That’s nearly half the amount of funding announced in August 2021 ($443 million), according to the Cut Through Venture newsletter, and is a sign of a continued investment slowdown coinciding with interest rate rises and ongoing economic uncertainty.

According to the newsletter’s author Chris Gillings, while the number of big ticket deals has fallen through the floor, there has been an uptick in bridge rounds –the quiet, unsung hero of downturns that don’t typically earn their own press releases or LinkedIn posts.

“In venture land, a bridge round is a round of financing that tides a startup over until its next larger round of funding and they’re the hottest thing to hit startup funding since the Patagonia reversible vest,” Gillings wrote this week.

“The number of bridge rounds is soaring, but their details may never be revealed publicly. Why? Because they’re mostly small, at flat or lower valuations than the startup’s previous round, and often funded by prior investors.”

Some of Australia’s biggest names kept away from startups last month including AirTree and Square Peg which didn’t feature in any of August’s publicly promoted funding deals.

Still, there were some big winners such as blockchain-based food supply chain company Lumachain which took on $28 million, and hydrogen electrolysis company Hysata which finished up its $42 million series A that included $10 million from the Clean Energy Finance Corporation.

Brisbane fintech Biza.io was successful in drumming up interest for its $7.5 series A in August that capped off five years of bootstrapping.

While no-code software company Sitemate raised $5.2 million in what turned out to be the only major round which Blackbird Ventures contributed to in August.

Wednesday’s announcement that Sydney semiconductor startup Morse Micro banked $140 million in a series B led by Japanese chipmaker MegaChips with support from Main Sequence Ventures, and Blackbird.