On the rise: SmartCompany selected funding from 2024. Source: SmartCompany
Earlier this year, we looked at trends in the startup ecosystem and detected early signs that 2024 could see a (slight) increase in funding for women-led startups, marking a turning point towards greater gender diversity in the funding landscape.
How much will startups raise in 2024?
This week, Cut Through Ventures’ latest data found that of the $1.7 billion raised by local startups in the first five months of the year, 85% came from all-male founding teams. It calculates that another $292 million has been raised this month, half of which is from male-only founding teams. $1.9 billion (excluding huge investments by the Federal and Queensland Governments into PsiQuantum).
All-female teams raised 5% of capital, and startups with at least one female founder got a further 10% — not huge numbers, but certainly an improvement over the previous year.
Last year, Australian startups collectively banked $3.5 billion.
Data analysis so far this year shows a silver lining for startups raising capital, with total capital raised in the first half of 2024 up 30% compared to the same period last year.
Any way you look at it, the last six months have been challenging after a few difficult years. So far, nothing like the Roaring Twenties. But these are companies that raised money during the bubble frenzy of 2021 ($10.6 billion) and 2022 ($7.4 billion), when startups were banking huge checks in the chaotic frenzy of the post-COVID/end-of-zero-interest-rate era.
Either way, today, as we mark the final working day of 2024 and the middle of another tumultuous year, some of Australia’s fundraising leaders share how they feel about 2024 so far.
Halftime startup funding situation
How do Australia’s startup funding leaders feel about 2024 and the (slightly) improving landscape for women-led startups?
Holly Brooks, Startmates chief storyteller and co-leader of the Ladymates
Startmate is full steam ahead into 2024. So far, there have been two clear themes for us: women and founders.
Readymates team leaders Kelly Sporck and Holly Brooks. Source: Startmate.
We started the year with an accelerator cohort made up of 60% female co-founders and launched a brand new strategy called Ladymates to support women from pre-career to founder to C-suite. Also, our pre-accelerator cohort was made up of 50% female co-founders and 10 out of 11 finalists for our pre-accelerator pitch night were female founders.
We are committed to a) investing in women and b) playing a role in nurturing and inspiring the next generation of female founders through our offerings (Student Fellowship, Women’s Fellowship, Ladymates Collective, Ladymates Leadership, Ladymates Club).
Our big bet is that the more we invest in women, A career journey The more people (students, new hires, workers, leadership) we have, the more we will see a change in thinking and funding (Yes, I was disappointed to see the latest cut-through data.).
The end goal is to have more women joining startups straight out of college, then leave to start their own companies, then have female leaders become key decision makers on the investment team, then have female founders return to the ecosystem to invest in even more women, and so the cycle continues. It’s a long journey, but it’s important.
James Alexander, co-founder and partner at Galileo Ventures
In 2024, we are excited to find great emerging founders: unproven, tenacious, impressive founders who are building something unique in a huge, multi-billion dollar market globally.
Galileo founders James Alexander and Hugh Stephens. Source: Galileo Ventures
The advent of generative AI and superintelligent AI is changing that, allowing software and hardware products to reach more markets.
For seed-stage startups, the goals of larger investors are constantly changing, from previously interested in investing earlier in their ventures to now wanting to see $1 million in recurring revenue before raising funds again.
Either way, being capital efficient and having real traction and returns in this market is key. Unfortunately, the result is less risk tolerance, which will have a negative impact on some sectors.
I think the intense interest in AI is understandable, but the sky-high valuations in early and later stage deals will be disastrous. We are experiencing perhaps the biggest technology platform shift of our lifetimes, and it will take time to deliver. Investors should look to see early winners take the lead. It is not indicative of long-term opportunity. pictureEarly leaders will not necessarily be the ultimate winners – history has shown that they often aren’t – and as the AI technology stack matures, the impact and development of superintelligence will take time to become clear, and what this means in terms of investment opportunities will evolve.
We are taking a deliberate and strategic approach to our AI investments over the next three years, choosing to back companies we believe are helping to create new product categories and future markets.
At Galileo, we are committed to backing more talented and ambitious female founders and CEOs. Currently, we back 35% female founders, which is higher than most of the larger Australian VC firms, but we can do better.
What we’re doing is launching new programs to scale our pipeline, the first of which is Jupiter, a program for funded female founders who want to start large technology companies.
It’s a small thing, but we know that every little thing counts when it comes to solving the challenge of increasing founder diversity, and as one of the few queer VCs, this means a lot to us.
Andrew Poesaste, partner at Lampersand
For Lampersand, 2024 is about focus and acceleration. We have formally launched our strategy for the next 10 years, which we believe will be the most important decade for value-add seed capital. This strategy began earlier this year with the addition of Taryn Peters and myself as fund partners.
Lampersand partners Andrew Poesaste and Taryn Peters. Source: Provided
Our portfolio companies are making impressive progress and we continue to be inspired by the quality of the founders we work with. We recently completed an investment in AI job matching platform Hatch and have strengthened our focused investment approach with portfolio companies such as Goterra, JigSpace and Expert360 seeing an 8x increase in value.
Rampersand looks beyond the AI market hype and focuses on the core capabilities of the platform shift that AI will bring: We are excited about vertical software and services, both of which we believe are ripe for disruption by AI.
For the first time, domain experts can build workflows and automations based on unstructured data that provide real value to users in largely ignored sectors of the economy, from agriculture to health services. AI can also enable near end-to-end service delivery by understanding user intent and leveraging voice and video.
The AI bull market has been going strong for several years now, but 2024 is the year AI will move out of the demo stage and into production. The question is whether AI startups can translate early excitement into long-term success.
The recent excitement around AI bears a striking resemblance to the “Peak of Inflated Expectations” stage of Gartner’s Hype Cycle, with the company predicting that we are currently on the brink of the “Trough of Disillusionment.”
It’s more important than ever for founders to align with investors and partners who have the right talent and drive to take them to the next level.
