Australia’s private capital sector is a dynamic industry that includes private equity, venture capital, corporate venture capital and private credit.
Together, these funds invest billions into the Australian economy each year, powering growth and employment in diverse businesses from start-ups to multinationals.
Businesses backed by private capital are often at the forefront of innovation, supporting jobs of the future in sectors such as advanced manufacturing, IT, and health. Throughout the pandemic, it was private capital that continued to invest in ground-breaking ideas, with more than 70% of private capital backed businesses progressing innovation in the last 12 months. Private capital investments contributed $54 billion to the Australian economy in 2020, as measured through its contribution to Gross Value Added (GVA). This equates to around 2.6% of the economy.
Venture capital (VC) is the innovation accelerator of Australia’s economy, investing in the emerging, high-growth sectors that will create the jobs of the future.
Venture Capital providers range from small start-ups to ventures generating up to $300 million annually, with Venture Capital investment appearing to have a strong multiplier effect.
Together, these businesses contributed a total of $13.6 billion to the Australian economy in 2020 and directly or indirectly supported over 100,000 jobs. This represents more than 25% of private capital’s overall contribution.
The Australian government’s recognition of the benefits of Venture Capital investment is highlighted through programs including the Early-Stage Venture Capital Limited Partnerships (ESVCLP) and Venture Capital Limited Partnerships (VCLP) programs. These programs have helped Australian businesses lead the world in sectors including AgTech, MedTech, fintech, cybersecurity, mining and resources technologies, and digital technologies.
Deals involving IT represented 38% of VC investment in 2020, while the year also saw increased funding in some of Australia’s most high-profile fintech companies. Private capital continues to be a major force behind the growth of Australia’s tech industry, which is fast becoming a world leader.
Research suggests that the tech sector contributed $167 billion to the Australian economy in 2020-21, making it the third largest sector behind mining and finance.