PFG convenes four top global VCs to explore why Australia’s startup ecosystem is turning heads worldwide.
By Karthi Sepulohniam, Managing Director and Head of Asia Pacific & Australia at PFG
Back in 2006, Australia’s tech scene wasn’t on the radar for most global investors. But at Partners for Growth, we couldn’t look away. We started investing in the Australian market that year, recognizing the country’s deep bench of technical talent, resilient founders, and an instinct to build for global markets. A decade later, in 2016, when I opened the Sydney office with Jason Georgatos, now President of PFG, we formalized our commitment to this exceptional ecosystem.
Yet despite this potential, capital options were limited. Banks dominated the lending landscape, and equity was often the only form of growth capital available. We saw a clear opportunity to step in. Since then, we’ve deployed over A$800 million to more than 80 Australian startups, bridging the capital gap and helping fuel the rise of a thriving and globally connected ecosystem.
Today, Australia’s venture capital market has matured in remarkable ways. In 2025, local VC funds hit a record A$17 billion in assets under management, fueled by a 7% YoY rise and a healthy pipeline of exits that is bringing a new generation of global investors to the region, according to the Australian Investment Council Private Capital Yearbook.
To better understand what’s driving this momentum, I sat down with four leading global VCs now actively investing in Australia:
- Sachin Bhanot, Head of Southeast Asia and ANZ Investments at Prosus Ventures, brings a sharp perspective on scalability and capital efficiency across emerging markets.
- Kabir Narang, Founding General Partner at B Capital, co-leads the firm’s South and Southeast Asia investments. A mathematician by training, he helps portfolio companies scale globally by bridging them to international markets.
- Aakash Kapoor, Principal at Peak XV, parlayed his entrepreneurial ambitions to helping other startups realize their goals.
- Cheryl Teo, Senior Associate at MassMutual Ventures, brings a background in corporate innovation to her VC role and is especially focused on AI’s potential in healthcare.
Together, we unpacked what makes Australia such a compelling venture market today, from capital efficiency and global-ready founders to geopolitical diversification and attractive entry valuations.
Punches Above Its Weight: An Innovation Ecosystem with Global Reach
For a country of just 26 million people, Australia has an outsized track record of producing world-class tech companies. Flagships like Atlassian, Canva, and Afterpay have long signaled the strength of the local ecosystem, but the VCs I spoke with say the next wave may be even more global, diversified, and defensible.
“Australia consistently punches above its weight in innovation,” says Narang. “We’ve seen breakout companies emerge from Australia and scale globally, drawing international attention to the ecosystem.”
Teo agrees, pointing to a new crop of startups emerging from sectors like AI, B2B software, healthtech, fintech, and climatetech.
“We believe some of the next breakout companies from Australia will come from these quietly compounding sectors,” she says. “We have high conviction in Australia’s potential to produce category-defining companies.” MassMutual have backed their conviction with investments in companies like healthcare platform Kismet and fintech InDebted, demonstrating the firm’s commitment to these compounding sectors.
That conviction is also rooted in the founders themselves, many of whom, investors note, combine technical sophistication with a global-first mentality and a bias toward solving complex problems.
“Australian founders exhibit a unique blend of independent thinking. They’re driven to tackle large, audacious problems,” notes Bhanot.
Global From Day One
We also talked about the instinct to build for global markets—a trait I’ve seen time and again in the founders we support, and one that every VC I spoke with echoed. For Australian startups, the desire to scale beyond their borders is baked in from the start. Many use their home market to build, test, and refine their businesses, getting the formula right before expanding abroad. That outward-facing approach, paired with deep local talent and strong technical foundations, creates meaningful optionality. Our portfolio company Employment Hero, which now serves over 300,000 businesses worldwide, exemplifies how Australian startups are launching with international ambition built in.
Read more about Employment Hero’s growth and global milestones here.
“This kind of ambition from day one was compelling to us as global investors,” says Teo. “What stands out is not just product sophistication, but how quickly founders build for customers outside Australia.”
Kapoor agrees: “We’re seeing Australian companies embed customer-centric DNA into products that combine technical mastery with delightful user experiences. Several have real potential to be global winners.”
That international mindset has become a hallmark of the ecosystem. “Compared to other regions, Australian startups often build with international scalability in mind from the outset,” adds Bhanot. “It positions them well for global success.”
A Talent Magnet
Australia’s appeal goes beyond its business climate; it’s a place top-tier talent wants to live. Founders and investors alike point to the country’s lifestyle, strong educational institutions, and R&D-driven university system as foundational to its innovation edge. That edge is becoming even more pronounced as leading U.S. research centers face growing headwinds from domestic policy shifts, giving Australia’s university-led innovation pipelines a new global audience.
“University-led research is a real strength,” says Teo, who highlights its role in fueling deep-tech sectors like healthtech and climatetech. “It also has a growing pool of repeat founders, which is creating a flywheel effect across the ecosystem.”
According to Bhanot, Australia’s reputation for technological depth and startup momentum is increasingly drawing top talent, particularly in fields like AI, fintech, healthcare and aerospace. This pipeline has guided Prosus’s investment strategy in the region, where Bhanot and his team has backed fast-growing Australian startups including banking platform Provide Constantinople and fiber-optic sensing technology provider Fibersense, while also making an early bet on healthcare platform Kismet.
Lean and Resourceful
Australian founders have earned a reputation for capital discipline, not just because of market constraints, but because efficiency is embedded in the way they build. Unlike some global counterparts, they’re often more deliberate in how they deploy capital, scale teams, and optimize for sustainable growth. That lean, resourceful approach is exactly what many global VCs are now seeking.
“The relatively high cost of talent pushes startups to operate leanly,” says Teo. “It’s driven better-than-average capital efficiency.”
Kapoor adds that advances in AI have only accelerated this dynamic:
“AI has collapsed the ‘time to value,’ ushering in an era of hyper-efficient startups. Lean teams can achieve significant revenue milestones faster and with less initial capital than previously possible.”
Strong Exit Pathways
Liquidity is a growing draw. Australia’s IPO track record and maturing M&A environment are giving investors more confidence that global bets can pay off locally. For mid-stage companies, this creates a compelling equation: global upside with real exit potential.
“There’s a healthy exit landscape here, from IPOs like Atlassian and Afterpay to a robust M&A market for mid-sized companies,” says Bhanot, adding it provides real pathways to liquidity.
Receptive Founders, Less Competition
For VCs used to battling for deals in crowded U.S. markets, Australia can feel refreshingly open. Several investors noted stronger access to founders, less competitive noise, and a collaborative spirit that supports long-term partnerships.
“We’ve been consistently impressed by the founders we meet,” says Teo. “There’s a scrappiness and vision that’s unmatched.” That combination makes it a compelling market for global investors.
Where the Next Breakout Companies Could Come From
While much attention has gone to Australia’s SaaS and fintech exports, investors are increasingly eyeing emerging sectors with long-term momentum. Teo points to the intersection of climate tech and industrial innovation, including advanced manufacturing, waste-to-value, and grid-scale storage, as areas with breakout potential. Others, like Bhanot, see healthcare and financial services as equally promising.
Maximizing investment for VCs
The arrival of global investors reflects just how far Australia’s startup ecosystem has come. For PFG, their presence signals momentum, not competition. As the funding landscape deepens, founders benefit from a stronger bench of partners, broader strategic support, and greater access to capital, creating the conditions for even bigger outcomes. It’s a sentiment echoed by other VCs in the region.
“The best founders explore multiple capital options,” says Kapoor. “Priority lies not only in the form of capital, but in the people with whom they partner. We encourage our companies to look beyond equity and find long-term partners, whether it’s debt, working capital, or equity.”
Debt from PFG can fund targeted growth initiatives, add additional cushion to the balance sheet and unlock scale without the same dilution as equity. Crucially, PFG operates as a true partner, willing to tailor financing to each company’s specific growth strategy and timeline, and with deep relationships across Australia’s tech ecosystem.
For VCs, bringing in a flexible debt partner early, during or just after a funding round, can mean an extra 6–12 months of momentum without additional equity dilution. It also allows startups to seize opportunities, like international expansion or strategic acquisitions, without scrambling for capital. As Australia continues to draw global attention, PFG remains proud to have played a role in shaping the ecosystem’s early growth, and is energized by the influx of new partners.
It’s incredibly rewarding to see the evolution. We’ve believed in this market for nearly two decades. Today, with more capital, more talent, and more opportunity, it’s clear that belief was well-placed.
The views expressed are my own and do not necessarily reflect those of my employer.
