VC investment today is heavily concentrated around the biggest private companies. Even at Series B stage, more than half the companies raising funding in 2025 were already valued at over USD100 million. Seed rounds are also getting bigger, as VC investors bet heavily on earlier-stage AI companies.

Globally, HSBC recorded 233 investments of over USD100 million in AI startups globally in the first 10 months of 2025. While the US accounted for over 70% of those deals, Europe and Asia Pacific each hosted 30 mega-rounds – including a USD112 million raise for Australia-based healthtech company Harrison.ai.²

The skew towards these mega-rounds reflects the scale of capex required to fund AI investments and underlines investors’ confidence in the AI ecosystem. At the same time, however, it highlights the challenge facing smaller, non-AI startups that are competing for a slice of a shrinking pie.

Overall, VC firms in the US raised less money in 2025 than they did the previous year, and established firms continued to dominate fundraising.

The latest edition of HSBC’s proprietary Funding the Future Survey, published in December, also found that confidence among VC investors has moderated slightly.

A slim majority (55%) of private market investors foresee an increase in activity over the next 12 months, down from 74% in the previous edition of the survey in October.³

For Australian firms looking to raise capital, a clear monetisation strategy, scale and global partnerships will be key to capturing investors’ attention.

While capital raising is never easy, we see plenty of reasons why Australia’s tech ecosystem can rise to the challenge.

One is their track record for efficiency.

While no country can match the US for the scale or depth of VC funding, Australia creates more unicorns per dollar of venture capital invested than any other country, according to Dealroom.co.⁴

Australia also has a thriving startup ecosystem, with more than 1,000 AI start-ups, rapid growth in climate and clean technology, and a healthy crop of maturing fintech businesses. Funding for digital infrastructure is rising rapidly: investments in data centres are expected to reach 2% of GDP by 2029.⁵

The Australian Governmentʼs recently released National AI Plan also makes it clear that AI is now considered a critical national capability, which should unlock more public procurement activity and encourage private investment.

On top of over A$460 million in existing AI-related government funding, the Plan includes a new "AI Accelerator" funding round under the government’s Cooperative Research Centres (CRC) programme.

Globally, continued enthusiasm around AI suggests that VC funding looks set to remain a scarce commodity for all but the biggest AI companies. Startups everywhere will need a compelling case to capture investors’ attention.

This article originally appeared in the Cut Through Venture State of Australian Startup Funding Report, which examines the largest data set available on the Australian startup funding landscape. Click here to read more The State of Australian Startup Funding Report 2025.