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Investment in Australian startups reaches $230m in Q2 2017: KPMG

The investments in Australian startups are expected to continue growing, after more than AU$1 billion was raised by VC funds in the 2016-17 financial year.

Investment in Australian startups has hit its peak since April 2014 when email marketing company Campaign Monitor announced raising $250 million, according to professional services firm KPMG.

From April to June, $230 million was invested in Australian startups across 36 deals, up from $90 million in Q1 and $181 million in the previous corresponding quarter in 2016. This marks an average of $6.4 million per startup.

Data from Startup Muster showed that the average amount of funding raised per startup in the 2015-16 financial year was AU$448,300. In the 2014-15 financial year, the average was AU$241,000, according to Startup Muster.

Corporate venture financing accounted for $109.1 million across seven deals, compared to $90.7 million in Q1, according to the KPMG Venture Pulse Q2 2017 report.

Amanda Price, head of High Growth Ventures at KPMG Australia, said the growth in VC investments signals a "maturation" of Australia's startup ecosystem.

"This quarter's data shows that investment in Australian startups is growing significantly -- with fewer but larger deals," Price said in a statement.

VC funds in Australia raised more than AU$1 billion for the first time in the 2016-17 financial year, up from the AU$568 million raised in 2015-16, Price added, referring to data from the Australian Private Equity & Venture Capital Association (AVCAL).

"With more capital available and deal flow up strongly on previous years, I expect investment to continue to be strong over the year," Price said.

Investment in Australian fintech also reached a record $656 million in calendar year 2016, more than triple the $185 million invested in 2015, according to KPMG. That year also saw
a record $8.6 billion being invested in fintech in Asia, thanks to Ant Financial's $4.5 billion financing.

Globally, VC deal value increased by 55.3 percent from $25.8 billion in Q1 to $40.1 billion in Q2. KPMG said the value was strongly affected by nine $500 million-plus deals including Chinese ride-sharing company Didi Chuxing's $5.5 billion round and Chinese content recommendation company Toutiao's $1 billion round.

Chinese bike-sharing startups Mobike and Ofo also raised $600 million and $700 million in Q2, respectively.

Chicago-based health tech company Outcome Health raised $600 million in Q2, while London-based virtual world company Improbable raised $502 million.

The US led VC investment in Q2, accounting for $21.8 billion, followed by Asia at $12.7 billion, and Europe at $4.1 billion.

While deal value increased, the total number of deals fell for the fifth straight quarter in Q2, according to KPMG. Early-stage deals were most impacted by the decline, with angel and seed-stage deals halving from 2,674 in Q1 2015 to 1,310 in Q2 2017.

Late stage valuations leaped from $175 million in 2016 to $260 million in 2017 thus far, the largest median increase observed this decade, according to KPMG.