Had coffee with three founders last week. All confused about the funding market. All getting bad advice.

Here’s what’s actually happening in Australian startup investment right now.

The Numbers Don’t Lie

2021: Record year. Money everywhere. Pre-revenue startups raising millions.

2024: Back to reality. Due diligence is real again. Metrics matter.

Early-stage funding is down roughly 40% from the peak. That’s not a crisis—it’s a correction to sustainable levels.

The money is still there. It’s just pickier.

What’s Actually Getting Funded

Watching the deals that close, patterns emerge:

Revenue matters again: Pre-revenue raises are rare. $10K MRR used to be cute. Now it’s table stakes for seed.

B2B over B2C: Consumer plays need massive traction. B2B needs unit economics. B2B is easier to demonstrate.

AI with substance: Not “we added ChatGPT.” Companies building real AI moats are hot. AI wrappers are not.

Profitability path: Investors want to see a path to profit, not just growth at all costs.

Australian-Specific Dynamics

The Australian market has quirks:

Smaller checks, more dilution: Typical seed rounds are $500K-$2M. That often means 15-25% dilution. Higher than US comparables.

Local vs. global: Investors want Australian founders to have global ambitions. “We’ll own Australia” isn’t enough anymore.

The Atlassian question: Every pitch gets asked how you’ll become a global company from here. Have an answer.

Grants can poison you: Too many founders chase government grants instead of customers. R&D tax incentives are fine. Grants as your business model are not.

The Canva Effect

Canva’s success is both blessing and curse.

Blessing: Proved Australian startups can reach global scale. More international attention on Australian founders.

Curse: Raised expectations impossibly high. Not every startup needs to be worth $40B. Most great outcomes are much smaller.

If your investor is disappointed you’re not Canva, find different investors.

Where to Actually Find Money

Active Australian investors I’m seeing move:

Blackbird: Still the biggest. Competitive to get in. Worth trying if you have traction.

Square Peg: Similar profile. Strong preference for repeat founders.

Airtree: Active at seed. Good portfolio support.

Right Click Capital: Earlier stage. More founder-friendly terms.

Angel networks: Often overlooked. Sydney Angels, Scale Investors, Melbourne Angels. Smaller checks but more accessible.

Strategic investors: Corporates like Xero and MYOB have investment arms. Good if there’s genuine strategic fit.

What I Tell Founders

1. Don’t raise unless you need to. The terms are tough. Bootstrap if you can.

2. Get to revenue first. Even $5K MRR changes conversations completely.

3. Australian early, global later. Prove the model here, expand with capital.

4. Mix your sources. Angels + institutional + grants = less dilution than one big round.

5. Be realistic about valuations. 2021 valuations aren’t coming back. Price yourself to close.

The Hidden Opportunity

Tough funding markets favor disciplined founders. If you can survive on less capital, you’ll have less competition and better terms when you do raise.

Some of the best companies start in downturns. Less noise. More focus. Stronger foundations.

The money is there for founders who deserve it. The bar is just higher. That’s not bad. That’s healthy.