Two of Australia's top tier VC funds are investors in Prospa. AirTree Ventures (co-founded by Bill Gates' former sidekick Daniel Petre) holds 9.6 per cent of the company; Square Peg Capital (led by former Seek co-founder Paul Bassat) owns 3.3 per cent. London-based venture fund Entree Capital is the biggest shareholder, with 34.4 per cent.

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VC funds, which invest in fast-growing tech start-ups, almost went extinct in Australia following the dot com bust at the turn of the millennium. But over the past couple years, they've come roaring back to prominence.

Last year, a record $1 billion was poured into domestic VC vehicles by wealthy investors and institutions such as superannuation funds. And recently the Future Fund backed an Australian VC firm, Blackbird Ventures, for the first time.

It is often argued (including by me) that the lack of a VC sector is one of the reasons our stockmarket remains dominated by ancient mining companies, banks and domestic monopolies that were in many cases founded over a century ago.

By contrast, in the US, where VC has long been a feature of the capital markets, the biggest and most valuable companies are now tech companies. They were all initially backed by VC, and some of them (Facebook and Google) were founded less than two decades ago.

"It would have been a big milestone," one top venture capital manager said of the Prospa float. "An IPO of a business with revenue, scale and liquidity for the LPs [investors] of AirTree/Square Peg is a momentous occasion for the new wave of VC managers, but we will have to wait for another day."

Despite the VC backing, Prospa operates a business that has been around for centuries: lending. It uses a proprietary algorithm to analyse reams of data and make a decision on loans more quickly than other lenders. The average interest rate on the loans it writes, the lengths of which range from three months to two years, is a eye-opening 41 per cent, according to its IPO prospectus.

It was a strange time to be floating a business like this. Australia is in the throes of a royal commission that has put questionable behaviour in the financial services sector in the spotlight; in the US, the share prices of tech-enabled lending businesses such as Lending Club and Ondeck are deeply in the doldrums.

One question following the Prospa non IPO is whether it affects sentiment among conservative local fund managers towards VC-backed companies that are expected to explore public listings soon.

Some institutional fund managers in Australia have a deeply sceptical attitude towards private equity (PE) floats in general following a string of disastrous deals including the Myer and Dick Smith IPOs.

There is information asymmetry in such deals, these fund managers say - PE companies selling a business know much more about it than the stockmarket investors being targeted to buy it.

But those were PE floats, involving traditional buyout funds who buy, restructure and sell established companies. VC funds promise to offer a different proposition - entirely new and fast-growing companies. (And in the case of Prospa, both AirTree and Square Peg were poised to double down by actually committing funds to the IPO, rather than pulling money out).

"Profitable and fast-growing Aussie tech companies like Prospa will always have plenty of options for funding - both in the private and public markets," AirTree partner James Cameron said. "Delaying the IPO was disappointing but it was a question of market timing, not to do with the business itself."

Local VCs are putting the substantial amounts of money they've raised to work: every Tuesday there are stage-managed announcements of new start-ups getting funded, usually in front of a graffitied wall.

The real question is how many of these start-ups go on to become substantial and sustainable companies. That usually requires graduating to a stockmarket listing, and surviving (or thriving) despite all the scrutiny that entails.

And with Prospa's IPO now shelved, a litmus test for how this process is evolving in Australia remains elusive.