Start-Up Deals Approach $3B as IPOs Make a Comeback

Venture capital investors are stepping up activity, with nearly $3 billion in start-up stakes sold in the first half of 2024. This matches the total for all of last year, and there is growing optimism that IPOs and tech exits are beginning to return. However, questions remain around valuations and investor motivations.

After two quiet years for public listings, major players in Australia's venture capital sector are revisiting the potential of the ASX. Firms such as Square Peg Capital, AirTree Ventures and several others are gaining momentum as investor pressure for returns increases and market conditions become more favorable.

PitchBook data shows that Australian start-up exits reached $2.9 billion from January to June 2024 across 25 deals. This is just below the $3.1 billion recorded in all of 2023. The majority of these were mergers and acquisitions rather than IPOs. Only one company, a medical device business, went public this year. The largest transactions included a $500 million software acquisition and a $400 million clean-energy transport buyout.

While confidence is returning, it remains cautious. Some companies are preparing for potential IPOs, particularly those with strong revenue and consistent profitability. Others are pursuing private paths to liquidity such as secondary sales or share buybacks. The funding landscape appears more stable compared to recent years, but there is not yet a widespread return to IPO enthusiasm.

Australia's tech start-up sector seems to be entering a phase of steady recovery rather than explosive growth. Exit strategies are becoming more varied and creatively structured. Although IPOs are still an option, many firms are likely to consider alternative liquidity solutions to satisfy investor expectations.

Source: Australian Financial Review, EY, ASX

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