• KPMG’s Venture Pulse report shows $US317 million in venture capital across 27 deals in Australia for the third quarter of 2018.
• Deals involved Judo Capital, Airwallex, Culture Amp, Flare, Gilmour Space Technologies, Simple, AgriWebb and GO1.
• AI (artificial intelligence) is likely to be a strong area of VC investment across the region.

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Venture capital (VC) investment in Australia startups surged to a four-year high in the September quarter, according to KPMG’s Venture Pulse report.

Startups attracted $US317 million ($AU445 million) across 27 deals in the three months.

Key Australian deals involved Judo Capital, Airwallex, Culture Amp, Flare, Gilmour Space Technologies, Simple, AgriWebb and GO1.

Software dominated investor interest with five out of the top eight deals being business productivity, financial or educational software.

“Most importantly, that rate of growth, despite sliding volume in terms of total deals closed, indicates the ongoing health of the Australian venture ecosystem,” says Amanda Price, KPMG Australia’s Head of High Growth Ventures.

VC investment in Asia dropped back to a more natural investment level after a record-shattering second quarter led by the $US14 billion raise by Ant Financial.

Asia dominated the top global deals this quarter, with eight of the top 10 deals, including three billion dollar plus megadeals: Grab ($US2 billion), Bitmain ($US1 billion), and Oyo Rooms ($US1 billion).

Globally, venture capital investment remained strong with $US52 billion across 3,045 deals. Overall, $US183.3 billion was invested globally, already surpassing 2017’s full year total of $US171 billion.

However, this quarter saw a continuing decline in the volume of seed and angel investments, particularly in Europe and Asia.

KPMG says AI (artificial intelligence) is likely to remain a very strong area of VC investment in Asia given its widespread applicability across sectors.

Many investors are interested in AI for financial services, such as solutions aimed at helping identify and avoid fraud and money laundering.

Autonomous driving will also likely also remain a big priority in Asia.

In Hong Kong, the IPO market is expected to stay strong, as evidenced by Bitmain’s recent filing18. There will also likely be an increase in Chinese companies looking at IPO exits on foreign exchanges.

China is the most prolific and lucrative venture ecosystem in the APAC region.

Singapore accounted for the largest deal in Asia this quarter with a $US2 billion raise by Grab14 but China continued to be a key driver for VC investment and market activity in the region.

“As far as can be seen, there is no appreciable reason for mega-deals largely driven by Chinese investment firms to cease within that nation, nor for multinational investment firms to cease investing in startups from India to Australia,” says Price.

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