Australian FinTech achieved another record year, but medium-sized businesses found it harder to attract investors as Covid-19 swept across the nation.
FinTech companies in the country raised more than $1.5bn boosted by large deals raised by Judo Bank, an SME challenger bank
- FinTech investment in Australia recorded its fourth consecutive year of growth as the sector shrugged off Covid-19 concerns to set a new annual funding record. Total capital invested grew at a CAGR of 63.7% since 2016 as the industry enjoyed great government, business and regulatory support.
- However, the extended lockdowns the country endured to control the spread of coronavirus have had a noticeable negative impact on the early and mid-stage segments of the investment market. Last year saw the first time funding from deals under $50m fall when deals in that segment raised only $301.9m, a 34.9% decline compared to 2019.
- Deal activity also continued it’s steady decline since a high of 108 transactions in 2017. The trend of increased funding but dropping number of deals suggests the Australian FinTech sector is consolidating and investors are backing established companies in the space. Indeed, 55% of last year’s funding came from three deals over $150m completed by Judo Bank which gave it the coveted unicorn status.
More than a third of Australian FinTech deals in 2020 were over $10m
- As the Australian FinTech industry matured, the share for deals valued at $10m and over increased from 9.8% in 2016 to 36.6% in 2020 as investors back established companies to expand into other regional markets.
- The share of deals under $5m has been shrinking continuously to reach 49.9% in 2020 as the Australian market matures and goes through a consolidation phase. The trend might be reversing, however, as we saw an increase in the share of deals under $1m as investors repositioned their portfolios and looked to back new innovative solutions to challenges brought by the pandemic
- The early-stage segment of the market was also supported by government action with the Australian Senate Select Committee on Financial Technology and Regulatory Technology extending its request for input about the industry to include the impact of the Covid-19 pandemic.
- Some of the recommendations outlined in the organisation’s interim report include enabling companies to hold virtual meetings, enabling electronic execution/witnessing of documents and electronic shareholder communication permanent as well as allowance for the superannuation funds to be invested more widely, including in Australian startups.
The data for this research was taken from the FinTech Global database. More in-depth data and analytics on investments and companies across all FinTech sectors and regions around the world are available to subscribers of FinTech Global. ©2021 FinTech Global