Singapore-based Airwallex props up Australian startup data in Q2 as deal count falls to two-year low

The fact that Singapore-headquartered global payments platform Airwallex was founded and maintains a presence in Melbourne has spared the Australian startup ecosystem from recording its worst quarterly funding levels since 2020 with a distinct lack of mega-deals.

The latest Q2 edition of the Cut Through Quarterly report notes a withdrawal from the bounce-back reported in March quarter, although angel and seed deals are moving at a rapid pace "with some pre-seed rounds closing in weeks from a lean deck".

Airwallex's $232 million Series F accounted for more than a quarter of the $812 million raised in the June quarter, which saw deal count slump to a two-year low with only two deals surpassing $50 million, with the other being Solar and thermal hydro storage solutions company RayGen's $76 million Series D extension.

Total funding for startups with female-only founder teams was abysmal, attracting just 0.5 per cent of the total dollars, while 11 of the 76 rounds involved female founders at all. 

"Strip out Airwallex, and only $29 million flowed to mixed-gender teams," the authors wrote.

"Reports of portfolio companies using venture debt, an increasingly popular alternative funding source since 2022, also declined to levels not seen in several years.

Adding insult to injury for the sector, the fifth-largest round recorded was actually a $40 million bail-out of Seer Medical, which was in administration.

The low performance in the numbers contrasts with a relatively upbeat sentiment from the investors surveyed, of whom 90% rated deal flow as "good" or "excellent", and only 3 per cent thought valuations would trend downwards over the remainder of 2025.

Compared to the first quarter, more investors are recommending that founders raise normal rounds or bridging rounds from current investors, at 64 per cent and 31 per cent respectively (compared to 58 per cent and 26 per cent in Q1). Far fewer are recommending that founders delay fundraising, at just 5 per cent versus 16 per cent three months prior.

"Portfolio health held steady in Q2 2025, but signs of stress are re-emerging. Layoffs have eased, but 30 per cent of investors reported at least one company shutdown, more than double the rate last quarter," the authors wrote.

"Reports of portfolio companies using venture debt, an increasingly popular alternative funding source since 2022, also declined to levels not seen in several years."

Airwallex's raise meant fintech startups attracted the most capital at $267 million, although without it the sector would have ranked an equal-second in terms of deal count at seven, tied with climate-tech/clean-tech, and behind health-tech which led the way with 11 deals.

The leading sector for capital raised ex-Airwallex was climate-tech/clean-tech at $135 million, followed by bio-tech/med-tech with $85 million and AI/big data with $70 million.

"AI is no longer a niche. It entered the top five most funded sectors for the first time and ranked second by deal count, with more than half of all software companies now pitching an AI-enabled product on their website," the authors wrote.

"The line between “AI” and “software” is fading fast; with many investors treating use of the technology as table stakes for funding."

Cut Through Venture also drew inspiration from San Francisco-based Carta to analyse seed to Series A graduation rates, and comparing the results with our US counterparts.

Not long after another report showed Australia leads the world in its ability to deliver unicorns for every dollar of venture capital invested, this further analysis from Cut Through Venture shows that Australian startups outperform the US in graduating from lower seed rounds.

"Since the 2021 boom, Australian Seed startups have outdone their US peers in nine of the past 11 quarters in successfully raising a Series A," says Cut Through Venture founder Chris Gillings, who is also a venture capitalist at Five V Capital.

"This marks a clear shift from 2019, when US graduation rates were consistently higher. My guess is this is at least in part due to the continued maturing of the Australian venture ecosystem, with more credible Series A investors and increasing offshore interest.

"One consistent theme across both markets is the importance of timing. Startups that do not raise a Series A within 24 months of their seed round see their chances drop significantly. This has implications for founders and investors.

"With 75 per cent of Series A activity occurring in the first 18 months, the window to raise or follow on tends to be earlier than many expect."

Cut Through Ventures' Top 20 raises of Q2, 2025

1. Airwallex ($232 million)
2. RayGen ($76 million)
3. Amber ($45 million)
4. PolyActiva ($40 million)
5. Seer Medical ($40 million)
6. Blinq ($39 million)
7. Relevance AI ($37 million)
8. QuintessenceLabs ($20 million)
9. Acorn ($19 million)
10. EatClub ($18 million)
11. Betr ($16 million)
12. Sicona Battery Technologies ($15 million)
13. CloudTech ($14 million)
14. Lyrebird Health ($12 million)
15. WeMoney ($12 million)
16. Superhero ($11 million)
17. Securely Group ($9 million)
18. Circumvent ($9 million)
19. Gridsight ($8 million)
20. Zyft ($8 million)

The original version of this story incorrectly stated that Hong Kong was the headquarters of Airwallex, based on the company still listing the Hong Kong office as its global headquarters on LinkedIn. The company has clarified that since moving its head office from Melbourne to Hong Kong in 2018, it has since relocated to Singapore.