Australian tech startups raised a total of A$7.4 billion ($5.1 billion) in 2022, down 30% from the previous record year of A$10.6 billion in 2021. This decline was due to several factors, including the global economic slowdown, rising inflation, and the ongoing war in Ukraine. With that being said, there were still some bright spots in the Australian tech ecosystem with a number of companies achieving unicorn status in 2022 including payments platform Airwallex, social media startup Linktree, and cybersecurity firm Atlassian (TEAM:US).
The decline in overall investment in was not evenly distributed across all sectors. Fintech and enterprise software saw an increase in investment from the previous year while Hardware/robotics/IoT, blockchain/crypto/web3, all saw a decline. Nonetheless, the Australian tech ecosystem is still growing and maturing as its estimated that the number of startups and valuations in Australia has increased by 50% and 200% in the past five years, respectively.
Some of the factors driving growth in the sector includes the availability of skilled talent, the government’s support for startups, and the increasing demand for digital products and services. In 2021, the government announced a A$1.2 billion ($800 million) investment in the tech sector which will be used to support startups, research and development, and the commercialization of new technologies.
The increasing demand for digital products and services is another factor that is driving growth. The COVID-19 pandemic has accelerated the shift to online shopping, education, and entertainment which has created new opportunities for tech startups to develop innovative products and services.
LDA Portfolio Company My Rewards International (MRI:AU) is at the forefront of this trend whose platform helps businesses reward, recognize, and engage their employees, create customer loyalty and engagement, offer rewards and benefits, and advertise their brand to an engaged community. In a world where consumers have endless options across products, services, and experiences, customer retention is the core of every brand’s marketing strategy. Not only is it more cost-effective than acquiring new customers, it also leads to higher profitability, improves brand reputation, creates a competitive advantage, and helps businesses understand their customers.
A key aspect of LDA’s technology investing strategy is to provide high-growth and capital-intensive businesses financial support in their organic and inorganic growth strategies. Our investments in Australian technology businesses such as Brainchip Holdings (BRN:AU) and My Rewards International (MRI:AU) demonstrates our strong push for building a portfolio of global technology companies with strong management teams, innovative technologies and sticky reoccurring revenue models.