Cut Through Quarterly: Australian Venture Capital Funding Report Q1 2026

Cut Through Venture (CTV), in partnership with Corrs, recently released its Australian Venture Capital Funding Report for Q1 2026. The report highlighted that many of the biggest investment rounds are going to startups focused on space, defence, robotics, AI infrastructure, cybersecurity, biotech and climate.

Key capital raising statistics

The Australian startup capital raising statistics in CTV's report show:

• A$1.8 billion was raised in the first three months of 2026, across 81 venture deals and 26 accelerator rounds, up 63% on Q1 2025 and more than double the amount raised in Q1 2024 and Q1 2023;
• a small group of large deals accounted for most of the funding – the top 10 deals accounted for almost 60% of the total money raised;
• the A$1.8 billion raised in Q1 was thanks to mega deals, including Advanced Navigation, Gilmour Space, and Neara – all companies that are developing technologies with valuations exceeding A$1 billion;
• Seed, Series B and Series C+ valuations moved higher, while Pre-Seed and Series A stayed essentially flat on what was reported at the end of 2025;
• median seed valuations have more than doubled from A$7.7 million in Q1 2024 to A$16 million in Q1 2026;
• investors have reported that portfolio health has continued to improve, with 80% describing their portfolio health as good or excellent, and 67% recommending that their portfolio companies raise a normal round (rather than delay fundraising or raise a bridge round) – up from 58% in Q1 2025;
• female founder and mixed teams raised A$205 million in Q1, a decrease from Q4 2025, although broadly in line with the longer-term average; and
• female founder and mixed teams hit an all-time high at the Pre-Seed stage in both deal share and capital share: founding teams that are either female only or mixed-gender accounted for 43% of Pre-Seed deals and 51% of capital. However, this declines as companies mature.

Sector perspectives

In terms of sector-specific data, the CTV report shows that, for Q1 2026:

• vertical SaaS was the leading sector for total capital raised and deal count, with A$447 million raised across 30 deals;
• hardware, robotics and sensors ranked second for total funding and deal count at A$303 million and 17 respectively;
• Space, Hardware, AI infrastructure and Crypto are being shaped by fewer, albeit much larger financings:
  • Space and defence – A$229 million across three deals;
  • AI models and data infrastructure – A$100 million across one deal;
  • Crypto, Web3 and stablecoins – A$113 million across two deals;
• startups with an AI component attracted the majority of both capital and deal activity; and
• the gap between vertical and horizontal software continues to widen, with vertical software capturing 80% of software capital and 76% of software deals in Q1, while horizontal software attracted just 20% of software capital and was much more likely to be viewed as unexciting by investors.

Investor sentiment and outlook

CTV's investor sentiment survey indicates that investors are being more selective about the startups and market segments where they believe defensibility exists, but the overall sentiment continues to be largely positive:

• 45% of investors said the funding market was favourable (down from 67% in Q1 2025);
• 18% of investors said the current state of the funding market is unfavourable;
• 57% of investors rated the quality of deal flow as either good or excellent (down from 76% in Q1 2025); and
• 43% of investors said they expected to do more deals this year compared to last year.

Access the full CTV report here.

Corrs submission in CTV report: Software Patents in Australia: The High Court Settles the Debate

While patents can be an important form of IP protection for many tech startups, there has been a long-running dispute about whether software inventions can be patented in Australia. The High Court has now settled the debate, opening the door for software-based innovations to be patented.

Earlier this year, the High Court refused to hear an appeal in a landmark case between Aristocrat Technologies and the Commissioner of Patents (Commissioner). The High Court took the view that the Full Federal Court's earlier decision in favour of patentability was clear and did not merit reconsideration. For technology companies and their investors, the outcome is a significant positive signal: it is now clearly established law that computer-implemented inventions can qualify for patent protection, even if they use conventional, off-the-shelf computer hardware, provided they do more than implement an abstract method or scheme.

The dispute had a long and unusual history. In 2021, the Full Federal Court applied a two-step test requiring computer-implemented inventions to demonstrate an "advance in computer technology" to be patentable – a high bar that effectively excluded many software-based innovations. An initial appeal to the High Court in 2022 resulted in a rare even split among six judges, leaving the matter unresolved. When the case returned to the Full Federal Court in 2025, the court rejected the "advance in computer technology" requirement and replaced it with a more flexible test: whether the invention produces an "artificial state of affairs and a useful result." In February 2026, the High Court refused to hear the Commissioner's further appeal, describing the Full Court's conclusion as an application of "established principles" that was "unanimous and clear."

The position is now settled: the test, under Australian patent law, is whether the invention, as implemented, produces an artificial state of affairs and a useful result. This means that a novel idea implemented on a computer to achieve something useful can be patentable, even where the underlying hardware is standard, provided it involves more than mere manipulation of an abstract idea. IP Australia has since updated its Patent Manual to align with the decision.

This broader and more certain scope for software patents means founders building software-driven products can more confidently pursue IP protection for their innovations, strengthening their competitive position and making their businesses more attractive to investors. Equally, they will need to be mindful of the potential infringement of third-party patent rights and should undertake clearance searches to ensure freedom to operate. For venture capital investors conducting due diligence, the decision clarifies the legal landscape and reduces uncertainty around the enforceability of software patent portfolios in Australia.

More details are available in the full CTV report.

Lessons from Dexus v Australia Pacific Airports: confidential information and private capital sale processes

Shareholders' agreements governing VC-backed companies frequently contain confidentiality restrictions, pre-emptive rights on share transfers, affiliate or permitted transferee regimes, and compulsory transfer provisions triggered by default. These provisions were central to a recent dispute heard in the Supreme Court of NSW. For startups, this case underscores the importance of having well drafted documents and a thorough understanding of the obligations within them.

Background

On 29 May 2026, Justice Hammerschlag delivered judgment in Dexus Capital Investment Services Pty Ltd v Australia Pacific Airports Corporation Limited [2026] NSWSC 600, a complex shareholder dispute concerning Australia Pacific Airports Corporation Limited (APAC), the owner of Melbourne Airport and Launceston Airport. APAC is privately held by five institutional investors and investment managers, with Dexus managing interests totalling a 27.32% stake (collectively, the Dexus Bloc), alongside IFM Investors (25.17%), Future Fund (20.34%), SAS Trustee Corporation (managed by TCorp) (18.47%) and Utilities Trust of Australia (managed by HRL Morrison & Co) (8.70%).

The relationship between the APAC shareholders is governed by a shareholders' deed (the Shareholders' Deed). The members of the Dexus Bloc had agreed that their rights, powers or discretions may only be exercised by Dexus for and on their behalf.

In late 2023, Dexus commenced 'Project Mercury' to sell a 9.7% interest in APAC. During the sale process, Dexus gave around 130 people, including prospective bidders and their advisers, access to a virtual data room containing APAC's business and financial information, including the highly sensitive APAC 20-year financial forecast model, without APAC's knowledge or consent. The Shareholders' Deed required that confidential information only be disclosed to a prospective purchaser that had entered into a confidentiality deed with the other shareholders in a form reasonably satisfactory to them and enforceable by any of them. Dexus instead used a template confidentiality deed that it believed had been previously agreed with APAC, and entered into side letters amending some of those deeds. In May 2025, the APAC Board issued a default notice to Dexus asserting a material irremediable breach of the Shareholders' Deed, triggering the compulsory divestment process for the entire Dexus Bloc's 27.32% holding.

Outcome

The NSW Supreme Court held that:

• Dexus disclosed APAC's confidential information in breach of the Shareholders' Deed, and that breach was both material and irremediable given the scope of information disclosed, the breadth of recipients, the potential adverse commercial consequences for APAC, and the fact that recipients cannot 'unlearn' the information;
• Dexus' conduct in concealing information from the Board before, during and after Project Mercury made the breaches graver, contributing to materiality and irremediability;
• as a matter of construction of the Shareholders' Deed, the Default Notice was validly issued to the entire Dexus Bloc (including the non-selling shareholders); and
• Dexus' arguments that the Board had been improperly motivated were irrelevant, holding that the Board's decisions could only be reviewable if Dexus pleaded and proved the equivalent of fraud or bad faith.

Justice Hammerschlag ordered that all claims by Dexus are dismissed. The significant practical impact is that, subject to any appeal, Dexus will be forced to sell its A$4.5 billion stake in APAC to the other shareholders.

Takeaways

The judgment provides several important observations:

• Potential selling shareholders should undertake a careful review of the shareholders' deed (and any other governance documents) prior to embarking on a sale process to identify and implement the precise process for the permitted disclosure of confidential information to third parties. Compliance with this process should be documented before a data room is populated and access to confidential information is granted. Careful attention needs to be paid to the drafting of confidentiality clauses in shareholders' deeds.
• Affiliate transfer regimes should be drafted clearly with current and future scenarios in mind to ensure that they provide adequate flexibility. Parties should scenario test collective shareholder regimes, like the Dexus Bloc arrangement, before they are agreed to ensure that there are no unintended consequences or that any remaining collective risks are appropriately dealt with in management agreements.
• Boards exercising default powers should treat the process with gravity, obtain independent legal advice, document deliberations and exclude conflicted directors from the vote.
• Shareholders should be careful to comply with general obligations in shareholders' deeds to be 'just and faithful' or to act in 'good faith', which create a high standard for the conduct of shareholders, especially when there are potential conflicts of interest.

Read the full Corrs article here.

TMT trends 2026

Australia's technology, media and telecommunications sector faces significant regulatory reform in 2026, with major implications for technology companies, startups and their investors.

Online safety obligations

In December 2025, the Online Safety Amendment (Social Media Minimum Age) Act 2024 (Cth) took effect, requiring services that enable online social interaction to take reasonable steps to prevent users under the age of 16 from holding accounts, including through age-assurance technologies. Separately, online safety codes and standards now apply to a broad range of online services on a risk-tier basis, targeting both unlawful content (Phase 1) and age-restricted material (Phase 2). The Phase 2 'Age-Restricted Material Codes' aim to protect Australian children under the age of 18 from seeing material that is 'lawful but awful', including pornography and self-harm material. Full Phase 2 compliance was generally expected by March 2026.

Privacy and Data Protection

The Office of the Australian Information Commissioner (OAIC) is conducting a sector-specific sweep of privacy policies across approximately 60 businesses in high-risk, face-to-face data collection environments (e.g. pharmacists and car dealerships) in response to overcollection risks. The focus of the sweep aligns with the OAIC's broader enforcement priorities for 2025-26, including correcting power and information asymmetries and scrutinising technologies such as biometrics, facial recognition and pixel tracking.

Additionally, from 10 December 2026, businesses using personal information in automated decision-making (ADM) that could reasonably affect individuals' rights or interests must, in accordance with newly introduced Australian Privacy Principles, disclose in their privacy policies the personal information used in the ADM and the decisions made by the ADM. Regulators are likely to require more detailed evidence regarding the operation of ADMs, and organisations should therefore be able to map automated processes, document data inputs and decision logic and provide precise disclosures consistent with the statutory requirements.

Surveillance

Australia's surveillance regime is a complex patchwork of Commonwealth and state laws, with active reform progressing at both federal and state level. Facial recognition technology remains a particular regulatory focus, given that it involves the collection of biometric data, which is classified as sensitive information under the Privacy Act, and therefore attracts a heightened risk profile due to the significant potential consequences for individuals if mishandled.

Spam Compliance

Australia's Spam Act 2003 (Cth) (Spam Act) prohibits the sending of commercial electronic messages without the recipient's consent, without identifying the organisation and without an opt-out option. The Australian Communications and Media Authority (ACMA) is actively enforcing this and imposing substantial penalties.

ACMA's 2025-26 enforcement priorities include disrupting mobile number fraud and combatting spam and telecommunications scams. In 2026, ACMA has already issued a A$376,200 penalty and accepted an 18-month enforceable undertaking against a telecommunications company for failing to carry out anti-scam identity checks which resulted in consumer losses of at least A$175,000. Additionally, from 1 July 2026, branded text messages displaying an organisation's name at the top of such messages will need to have the sender ID registered on the SMS Sender ID Register as part of the Australian government's 'Fighting Scams' initiative.

Businesses should re-evaluate commercial electronic messages and review the validity of their customers' marketing consents on an ongoing basis to avoid the risk of increased Spam Act enforcement.

Read the full Corrs Article on TMT trends 2026: cyber security and online safety.

Read the full Corrs Article on TMT trends 2026: privacy, surveillance and spam.

Tech M&A themes and SaaS in the spotlight

Platform Advisory Partners' analysis of Australia and New Zealand (ANZ) technology M&A deals from Q1 2026 highlights the following.

Despite a slight downturn in deal volumes, continued overseas interest in Australian technology businesses has seen local median transaction sizes tick upwards, with the majority of targets in Q1 2026 A$100 million+ deals (listed below) finding new overseas homes:

• RPMGlobal Holdings – taken private by Caterpillar (US-based) for A$1.1 billion;
• DC Co acquired by Pacific Equity Partners (local) for NZ$45 million;
• PropertyMe acquired by EQT (Sweden-based) for A$350 million; and
• Whip Around acquired by Accel-KKR (US-based) for A$100 million+.

A range of external factors affected SaaS valuations in the first quarter of 2026, including the 'SaaSpocalypse' resulting from AI advances, ongoing impacts from tariffs and the uncertainty resulting from conflicts in the Middle East. This has ultimately seen SaaS revenue multiples decrease from a median over 5.0x to 3.4x in only a few months.

These global trends have filtered down through the ASX boards as well, with local technology leaders in Xero, WiseTech and Pro Medicus collectively seeing A$50 billion in market cap wiped over the past six months. Continued multiple compression on SaaS large-caps will likely see sustained pressure on technology deal counts across ANZ, as bid-ask spreads widen until targets learn to accept 'new normal' valuation multiples, or until macro factors improve and multiples expand once again.

Platform Advisory Partners is a Melbourne based advisory firm specialising in providing M&A and capital raising advisory services to high-growth and technology companies.

About Corrs

Corrs is a leading Australian independent law firm, with a cross-disciplinary team which has a deep understanding of the needs of startups and high growth companies. We act for both startups and a range of investors, including local and international venture capital funds, strategic investors and universities.

Corrs has also developed CorrsEdge, a cutting-edge online platform which gives startups the legal support they need at the early stage of their growth cycle. The platform offers access to over 30 intelligent legal documents with dynamic automation capabilities which enables users to generate bespoke documents and tailor them for their business. The Corrs Edge platform saves time and money, allowing startups to ensure that they have high quality legal documents without the typical costs of using a top tier law firm.

This publication does not constitute legal advice and should not be relied on as such. You should seek individualised advice about your specific circumstances.