The 2025 Australian Funding Landscape: What's Actually Happening

I’ve raised capital twice in Australia. Once in 2022 (easy money era). Once in 2025 (now). Completely different experiences.

Here’s the ground truth about the current funding landscape.

The Numbers

Total VC investment in Australian startups, 2025 YTD: Down 35% from 2022 peak.

Seed rounds: Still happening. Smaller than before. $500K-$1.5M typical.

Series A: Much harder. Many 2022-2023 seed companies can’t raise.

Series B+: Only for clear winners. Revenue multiples matter again.

The “spray and pray” era is over. Investors want traction, not stories.

What Investors Actually Want Now

Revenue: Even at seed, investors want to see something. $5-10K MRR isn’t enough, but $0 is a problem.

Capital efficiency: How much did you spend to get here? Lean teams win.

Clear path to profitability: Not necessarily profitable now, but demonstrate you understand unit economics.

AI angle: Still helps. But “we use AI” isn’t enough. How does AI create a moat?

Australian market fit: Global ambitions are fine, but dominate locally first.

The investor pitch that worked in 2022—big vision, small traction, trust us—doesn’t work anymore.

The Investor Landscape

Active Investors (Still Writing Checks)

Blackbird: Still the biggest player. More selective. AI and climate are priorities.

Square Peg: Active but disciplined. Looking for proven teams.

AirTree: Focused on later stage now. Pre-seed is harder to get.

Artesian: Smaller checks, more companies. Good for first funding.

Main Sequence: Deep tech focus. If you’re doing hard tech, talk to them.

Less Active Than Before

Many smaller funds are sitting on their hands. Waiting for better opportunities or managing existing portfolios.

Some have quietly stopped investing altogether but haven’t announced it.

New Entrants

Family offices are more active. Harder to find but often easier to work with. No fund timeline pressure.

Corporate venture is growing. Telstra, NAB, and others have active programs.

The Process Now

2022 timeline: Intro, pitch, term sheet in 4-6 weeks.

2025 timeline: Intro, multiple pitches, due diligence, term sheet in 3-6 months. Maybe.

What this means:

  1. Start earlier: If you need to raise in 6 months, start now.
  2. Have more runway: You can’t negotiate from desperation.
  3. Talk to more investors: Expect lower hit rates.
  4. Be ready for diligence: They actually check references and numbers now.

Valuation Reality

2022: 20-50x ARR was normal at seed. 2025: 5-15x ARR if you’re lucky.

This isn’t a bad thing. Crazy valuations hurt founders long-term (down rounds, liquidation preferences, etc.).

Realistic valuations mean:

  • Less dilution than headline numbers suggest
  • Easier follow-on rounds
  • Less pressure to grow at all costs

If someone offers you 50x ARR, ask what the catch is.

Alternative Paths

Revenue-Based Financing

Lighter Capital, Clearco, and others will lend based on revenue. Non-dilutive. Good for bridging or avoiding down rounds.

Typical terms: 6-12% of revenue until you repay 1.3-1.5x the principal.

Grants

R&D Tax Incentive: Still available. 43.5% refundable offset for eligible R&D.

Export Market Development Grant: Up to $150K for export expenses.

State grants: NSW, VIC, QLD all have startup programs. Apply to everything.

Bootstrap Longer

The best funding terms come from not needing funding. Get to profitability, then raise from strength.

Many successful Australian companies (Campaign Monitor, SafetyCulture) bootstrapped longer than the conventional wisdom suggested. SmartCompany has covered these stories well.

My Advice for 2025-2026 Fundraising

  1. Get profitable or close to it before raising. Changes everything.

  2. Warm intros only. Cold outreach is even less effective now.

  3. Know your numbers cold. CAC, LTV, churn, cohorts—have answers ready.

  4. Have a credible AI story. Even if you’re not an AI company, show how you’re using it.

  5. Consider smaller rounds. $800K at fair terms beats $2M at bad terms.

  6. Talk to founders, not just investors. Who actually closed recently? Get their advice.

The funding landscape is harder. But harder for everyone means less competition too. Good companies still get funded.

Just expect it to take longer and require more evidence than before.