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Welcome to Cut Through Venture for April, where we dig into
March's Australian startup funding.

Get caught up with prior editions here.

Good Morning,

Welcome aboard to the 387 new subscribers who join us in March, and thank you to those who referred them.

1Q22 was another record quarter for Australian startup funding. To hear all about it, join us next week for our all-star virtual panel, featuring Samantha Wong (Blackbird), Nicole Small (Rampersand), Samar Mcheileh (Scale Investors) and Alex Nikov (J.P. Morgan Technology Investment Banking).

We'll dig into Q1, attempt to forecast where we're headed, and examine how public market turbulence might spoil the party.

REGISTER TO ATTEND

In other news, Cut Through Venture will remain founder-owned, after the ACCC blocked our April 1st funding deal. We hit ramen profitability yesterday, so we'll live to send another newsletter!

Ok, onward...

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1Q22 = 1H21 funding.

March was the seventh-largest funding month ever, capping a bumper start to 2022. Total funding in 1Q22 was in line with the entire first half of 2021. 

The multi-billion-dollar question on everyone's lips is whether this funding pace will continue. A laundry list of macro issues could cause deal price compression, or cause some investors to slow to a jog after the 12-month sprint they've been on. 

It's safe to assume that a large chunk of the 1Q22 announced deals announced were either transacted or agreed to in late 2021. Funding rounds that kicked off in the "tech stocks are down by 20-90%, a sovereign state is being invaded, while inflation is on the rise, and we're scared of interest rates going up" era will begin trickling in this month.

No matter how things shake out, CTV will cover it!

There were fewer large-but-not-mega deals than usual in March. Less than 15% of rounds were more than $20M, and there were none between $50-99M. Startmate's Summer22 cohort announcement bolstered March's sub-$1M funding round tally.

Outlier sized announcements from Immutable, LinkTree and Zeller meant that the top 20% of deals accounted for 85% of total funding volume. 

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Blockchain/Crypto/Web3 shot to the top of the funding chart for the first time. Australia's first Web3-unicorn Immutable accounted for most of the dollars invested in the sector, during a month with fewer mega-mega deals than usual. 

Other busy sectors included Fintech, PropTech/Construction, and EdTech/Training. 

East Coast states accounted for more than 99% of total capital invested, and all but five reported deals. 
Average deal sizes at all stages slipped from the lofty heights seen in February. March averages more closely resembled those of 2021.

In the absence of reliable valuation data, these are the charts to keep an eye on over the coming months. Valuation data is rarely openly reported until startups nudge into 'unicorn territory'. If we assume that the average equity exchanged at each fundraising round remains relatively constant, the average deal size is a decent proxy for how valuations are holding up.
Unicorn streak paused.

The ecosystem's first-ever 'unicorn month streak' came to an end in March. Total funding fell short of $1B; however, March topped the deal count for the quarter with 72 funding events.  

Welcome to funding (de)central. CryptoTaxCalculator is the only crypto startup on earth with a name that actually describes what they do. And they raised $4M to help them do it. Following its January Seed round, decentralised personal data monetisation platform Itheum, raised again from a who's who of the deep tech crypto investing world. prePO, which allows investors to speculate on private companies by purchasing synthetic assets, raised an international crypto investor party round. Also pre-launch, decentralised finance startups Minke and Swell Networks raised Pre-Seed and Seed rounds.

Doing it for the kids. Me& raised a Seed and Optivance raised from the crowd for further product development of their baby formula products. Babysitting booking platform Kiddo raised a strategic round from childcare centre operator G8. Weyo raised an early-stage round to develop its augmented reality learning games platform, while Lockpick Games received the Startmate bump to help them scale their standardised test prep product. Edapt, whose school data platform helps schools utilise data to support teaching and learning, was also part of Startmate's most recent cohort.

Make work work for you. Startup favourite Cake Equity raised its Seed round to expand its equity management solution into new global markets. Earlywork announced its Pre-Seed to help build out the home for young people creating the careers of tomorrow in tech, startups and social impact. Fourthrev raised its Series A to expand its global team building out its catalogue of educational programming focused on critical areas with skills shortages. Predictive Hire raised its Seed round from a group of high-profile angels to continue to scale its interviewer bot solution globally. And, to help on the expense side of the ledger, Cape raised its Pre-Seed and an accompanying debt facility to modernise the employee corporate card.

Show me the money. coaXion, Bridgit, Driva, and Just Fund all raised to shake up their respective lending niches. coaXion's equipment finance product uses machine learning to deliver variable terms based on the asset's utilisation. Bridgit promises same-day bridging loans on residential property to help take the heat off your property search. Driva's car finance marketplace takes the shadiness out of auto lending, while S22 Startmater Just Fund helps reduce the financial crunch of divorce proceedings. 
We need a bigger stable.

Immutable, LinkTree and Zeller entered the crowded Aussie unicorn stable, bringing the 2022 new unicorn tally to seven. The CTV unicorn forecasting apparatus predicts that we'll finish the year with a lucky 21 unicorns frolicking on our shores. 

Following its $82M raise in September 2021, Immutable raised a mega Series C round from Temasek, Animoca Brands, and Tencent. Local's AirTree and King River Capital also returned after participating in last year's raise. The funding round springboards Immutable to a $3.5B valuation and positions it as a global NFT power player. Immutable will enter opportunistic acquisition mode, pouncing on smaller players who've struggled since the most recent crypto dip. 

Also, in payments, account-to-account payment startup Zepto raised its Series A from Airtree and Decade Partners. Zepto's payment API powers real-time direct money movement for many technology partners, from fintech startups to Australia Post.

A long list of returning top-tier local and international investors filled out LinkTree's Series-C round. Despite the onslaught of copycat competitors, LinkTree continues to grow users at the mesmerising rate of 40,000 per day. The startup has now raised $225M in the last 18-months and is valued at $1.8B.

For the second time in less than twelve months, Zeller raised a mega-round from US-based funds Headline, Addition, Spark Capital, and locals Square Peg and Hostplus. The startup, which has a team of engineers in Ukraine, is quietly swindling small business banking customers away from the incumbent banks at a rate of ~10,000 per month.

San Francisco-based Telescope Partners and Aussie investors Five V and Carthona led a sizable Series A investment into strategy execution platform Cascade. The startup aims to elevate corporate strategy processes out of Powerpoint slides and Excel workbooks (and out of the hands of expensive Mckinsey consultants). The platform brings project management, KPIs and outcome tracking into a central spot, aligning teams to (actually) deliver on their strategic objectives.

Plug-and-play white labelable comparison software startup Cimet received a sizable strategic investment from comparison OG iSelect. Meanwhile, mining OG BHP, and several international VCs, invested in mining tech startup Plotlogic. The startup's tech precisely identifies every rock's location and material properties in a mine, reducing wastage.

Female Founders
The percentage of deals involving at least one female founder in Q1 was in line with the two-year average. Whilst still low, deals involving female-only founder teams in 2022 are tracking higher than the longer-term average.

Deal participation of female founders in 2022 is currently tracking better than last year at the Accelerator and Seed stage and in line with 2021 at the Angel/Pre-Seed stage. Later stage funding to female founders is tracking behind the long term trend level.

Note: 2021 stage-level data in last month's analysis contained a calculation error. The below is correct.
The Funders
Excluding crowdfunding participants, 135 unique investors were reported as part of February's funding flurry. The most active investors were Startmate (who welcomed 13 new startups into their newest cohort), Airtree (Immutable, Linktree, Zepto), Five V (Cascade, Cydarm), Carthona (Cascade, Driva), Artesian (Mastt, Varicon), Investible (Mastt, Language Confidence), and crowdfunding platform Birchal (Prepd, Sneaker Laundry, Cassava Bags, Vantage Australia, Zorali).

We now feature a running list of newly launched startup investment vehicles. Like our funding data, this list comes from publicly available information plus details submitted straight to us by funds. Submit your newly launched vehicles via email.
04/22 - Side Stage VC Early - $10M
03/22 - Carthona W3, FT, SW - $100M
03/22 - Atlassian Global CVC top up - $147M
03/22 - Access Capital Emerging Tech - $10M
03/22 - Firemark Early - $75M
02/22 - King River Web3 - $50M
02/22 - Firemark Early - $75M
01/22 - Airtree Seed - $200M
01/22 - Airtree Web3- $50M
01/22 - Airtree Growth- $450M
01/22 - Aussie Angels Syndicate Platform 


Finally, applications for Antler's Angel Experience close on April 8. If you're an active angel investor and would like exclusive access to Antler’s due diligence process and investment opportunities apply today.

That's it. See you at the panel.
– Chris 
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