I went deep on the Cut Through Venture and Folklore Ventures State of Australian Startup Funding report, the quarterly breakdowns from 2025 to Q1 2026 and Airtree’s mid year update. The same patterns kept showing up behind the bigger rounds. The figures below are as those reports put them.
1. Physical world or vertical, not horizontal SaaS
The new Australian unicorns in Q1 2026, including Gilmour Space, Advanced Navigation and Neara, were physical world companies. The best funded areas were vertical software, hardware and robotics, and space and defence. Horizontal SaaS is facing real scepticism from investors. Deep tech and infrastructure are getting the cheques.
2. AI built in, but not the pitch
The reports put about 61% of dollars invested in 2025 into companies with an AI offering, while only around 20% of deals were pure AI companies. AI is the layer, not the product. Investors are wary of anyone leading with an AI label without proprietary data, workflow integration or a real moat.
3. Real revenue or hard tech before the raise
The Series A bar in 2026 is roughly $1M to $3M ARR, strong month on month growth and net revenue retention above 100%. Pre revenue Series A rounds mostly happen now only with deep scientific IP. Only about 22% of seed funded Australian startups make it to Series A.
4. Capital is concentrated
In Q1 2026 the top 10 deals took about 59% of all capital raised, and the top 20 took about 79%. It isn’t a rising tide. It’s a few big waves hitting very specific shores.
My read
The ANZ funding market isn’t broken. It’s split in two. A hard problem, vertical depth, AI underneath and real traction gets a cheque. Miss the pattern and the round usually doesn’t happen. If you’re building toward your first raise, that’s the bar to plan for.