Australian investors spent $24 billion backing Asian startups over the past decade

The fight for venture capital in Australia isn’t just between local startups – they’re also increasingly competing with international founders for investor attention according to a new report from Asialink Business and the Tech Council of Australia (TCA).

The Building the Australia-Asia Tech Corridor report explores the vital connections between Australia’s and Asia’s tech ecosystems and found that between 2013 and 2023 Australian investment into Asian startups totalled $23.8 billion.

But rather than a competition for capital, the paper argues that broader investment in the region benefits the local sector as well providing greater opportunities for all.

The analysis is the inaugural discussion paper in the Tech Connections Series, which aims to develop a holistic picture of the linkages between Australia and Asia’s tech ecosystems.

Among those who see opportunity in the region is Jonathan Hannam, cofounder and managing partner of Taronga Ventures.

“Asia’s rapid urbanisation creates incredible opportunities for leading emerging technology companies to scale,” he said.

“For Taronga Ventures, we see many investment opportunities across the built environment and real asset sectors and this is a strategic driver for long-term growth.”

The paper’s key findings include:

• Australian investors led 40% of the transactions they engaged in over the last decade.
• 77% of Australian investments target seed and early-stage companies in Asia, particularly in the Consumer and B2C sectors.
• 52% of all Australia-linked investment is directed towards Singapore
• The value of Indian capital raises involving an Australian investor grew by 95% over the decade (2013-23), with the number of transactions doubling  between 2015 and 2023.

Local VCs such as Square Peg and Investible have scouted the region for investment opportunities offices in Singapore, alongside other local VCs looking looking more broadly for startups aligned with their investment thematics.

Meanwhile, government and private collaborations are encouraging Asian startups launch in Australia while local ones expand into the region, so the increasing interconnectedness of capital is unsurprising.

Currently, CSIRO RISE accelerator is recruiting local agetch startups keen to expand into India. The NSW government just kicked off a reciprocal deal, International Landing Pads, which offers nine startups the chance to crack the Southeast Asia market via coworking sites in Vietnam, Indonesia and Malaysia. Startups from those countries are also invited to Sydney.

Interestingly, the Asialink Business analysis found that Australian investment cycles have mirrored global investment in the Asia-Pacific region since 2018 following a rapid jump in the two years prior.

The value of Australia-linked investments in Asian startups grew 27-fold between 2016 and 2018, the paper found. However, it reached its lowest point since 2016 in 2023, dropping more than 86% from 2022 to just $779 million. That mirrored a decline in venture funding from all investors.

 “While the amount invested year-to-year has fluctuated in line with global conditions, we expect this relationship is here to stay and shows great potential for mutually beneficial growth,” the paper said.

Robert Law, Director Advisory & Insights, Asialink Business said the paper proposes establishing a regional dialogue, collaboratively led by both industry and policymakers, to deepen the connection.

“The development of a robust Australia-Asia tech corridor is critical for fostering innovation, growth, and collaboration; how connections can drive mutual success across both regions,” he said.

The exchange of capital, people and technology would create the conditions for two-way investment to grow, and benefit both the Australian and Asian tech ecosystems.

Asialink Business CEO Leigh Howard said success in Asia requires more than just capital.

“It demands a deep understanding of local dynamics and the ability to build strong, in-market relationships,” he said.

“Developing Asia-specific capabilities is essential for Australian investors looking to unlock new opportunities in Asia’s tech markets.”

The discussion paper’s 3 key takeaways are that:

• Australian investment into Asian startups is influenced by international conditions including opportunities to connect in-person: This means it may be difficult to influence investment outcomes through specific policies or initiatives. But the number of investments seems to follow a different pattern. Growth in transactions is steadier with one brief dip in 2020 which we expect was driven by economic uncertainty associated with the COVID-19 pandemic. The proportion of these investments led by Australians has stabilised as pandemic travel restrictions have been removed.
• Australian investors’ focus is grounded in our ecosystem’s existing strengths – early-stage investments and software (B2B/B2C): The primary focus of Australian investment into Asian startups is in software, with Consumer/B2C leading with 35% of investment, followed by B2B that received 13%. This reflects the main segment-based strengths of Australia’s tech ecosystem. A large majority (77%) of investments are seed or early stage. This likely builds on Australian investors and companies’ experience in growing early-stage funding levels to become more globally competitive – though there are still funding gaps within the Australian ecosystem
• Singapore is the standout destination with significant opportunity to build regional relationships with the next few destinations of interest including India:  The majority (52%) of capital raised by Asian startups when an Australian investor is involved goes to one country: Singapore. Discussions in developing the paper suggested that many Australian investors choose to invest in and through Singapore due to the stability of the market and ability to tap into the nation’s regional networks and expertise. But there is significant growth in the next few destinations of interest. Southeast Asian markets beyond Singapore have emerged as a significant region of interest.

Tech Council CEO Damian Kassabgi said a strong connection with our nearest trading partners offers greater opportunities for all.

“The mutually beneficial exchange of expertise, via talent, investment or technology, is the foundation of strong economic relationships between Australia and Asia,” he said.

“These connections can support both regions to grow companies globally.”

Asialink Business is a federal government-backed advisory service helping Australian organisations and professionals expand in Asia.

You can download the full Building the Australia-Asia Tech Corridor discussion paper here.