The Australia Venture & Startup Report 2026 by Sydney VC Side Stage Ventures with Dealroom, Vercel, AWS and the Australian Investment Council looked at the past decade of the local VC-backed ecosystem. It’s now grown 13.7 times faster than any other major hub, creating more $10 billion companies per dollar invested than anywhere else in the world.
Now in its second year, the report credits the founders behind Canva, Atlassian, Afterpay and, most recently, Eucalyptus; alongside strong universities, a deepening technical talent base, and a growing community of exited operators reinvesting into the next generation for the national success.
The dry powder concerns of the last few years appear to be fading, with venture funding in 2026 on track to be the strongest year since 2022.
However, the combined total disguises a flatline in early-stage investment, which has fallen every year since 2021.
Alongside that, median seed valuations now sit 50% below the US, although AI mega-rounds there are the primary reason the gap doubled in 12 months.
Most notably, Australian founders now raise 41% of their early-stage capital from overseas. That’s double the share in Europe or the US. While its a compliment that international investors find the local market appealing, it’s also a sign of how little domestic capital reaches the early stage.
The report lands amid ongoing debate about the federal Budget’s tax changes and their impact. There are some upsides, with the government expanding the VCLP and ESVCLP venture programs, startup shareholders and investors are waiting to see if the government will deliver a carve-out for changes to the 50% capital gains tax discount from 2027.
Other key findings from the 2026 report are:
● World-class outliers on scarce capital: Australia ranks first globally for decacorns created per dollar invested and third for unicorns, at 1.09 unicorns per US$1 billion. With six decacorns and less than US$40 billion of VC since 2000, it is tied fourth in the world for decacorns created.
● Australian venture outperforms global competition: Australian VC has delivered a 24.4% pooled return over five years, almost double that of US peers and also outperforming Europe & China.
● Record exit activity: Australia ranks fourth globally for VC-backed M&A value since 2020 at US$56 billion, ahead of China and India, and recorded over 65 exits in 2025, its highest to date.
● More capital overall, but seed remains constrained: 2026 is on track to be the strongest year since 2022 for VC dollars deployed yet early-stage investment has fallen every year since 2021. Just 18 Australian funds completed five or more seed deals in the past year, against 598 in the US and 516 in Europe.
● The talent flywheel: Eucalyptus’s landmark AU$1.6B acquisition is evidence that the ecosystem flywheel is working: talent, capital and ambition are being recycled from one generation of breakout companies into the next.
● AI, health and energy are the new leaders: Investment has shifted from fintech and enterprise software to AI, Health and Energy. Australia now has 470+ VC-backed AI startups generating US$34.9B in combined enterprise value up 6.3x since 2019.
Side Stage Ventures founding partner Ben Grabiner said the report confirms Australia’s ecosystem is globally competitive, and given it’s relative newness, is set to see its flywheel grow.
“We have one of the fastest-growing and most capital-efficient startup ecosystems in the world, our venture funds are producing leading returns and tech has now become a really meaningful part of the domestic economy,” he said.
“As this progress compounds, it has become a powerful platform from which to build the next generation of breakout companies.”
Dealroom founder Yoram Wijngaarde said the data shows Australia’s ecosystem consistently punches above its weight.
“Australian founders have built all of this under real capital constraints. The foundations are clearly there but the next step is making sure the capital keeps up with the ambition,” he said.
You can download the full Australia Venture & Startup Report 2026 at sidestage.vc/outliers-report-2026
