Fintech funding is up 137%. Fewer fintechs got funded.

Fintech funding in FY26 reached $1.7 billion! That’s a lot. Up 137% on the previous year! That’s huge! But wait…

I just spent the past couple of days looking into the numbers and here’s what I think is actually going on:

• Australian fintech funding in 2026 had its best headline year since 2022
• But underneath that headline is a different story: the big increase is distorted by a handful of large raises; in fact fewer companies were funded than in any of the seven years the report covers
• The damage is at the ‘top’ of the ladder, where Series A and Series B+ rounds have slowed down hugely
• The capital exists. Between superannuation at $4.8 trillion, the Future Fund at $269 billion, and something over $1.6 trillion of investable assets held by Australian high net worth individuals, Australia is not a country short of investable money¹
• The problem is that relatively little of our own money gets invested in Australian fintechs²

Why?

There are at least two documented reasons for it:

• One is that the way superannuation is measured apparently discourages super funds from holding venture capital at all.
• The other is that our main venture tax structure (“Early Stage Venture Capital Limited Partnership” or ESVCLP) excludes fintechs that provide financial products.

Both matters were in front of Treasury this year. The superannuation performance test was consulted on in May.³ The new capital gains concession that brings the ESVCLP exclusions forward was consulted on in June.⁴ Neither has reported yet.

Let me go into this in a little bit more detail.

Australian fintech funding

I only started looking into this in detail this because I was at Intersekt in Melbourne last week, where a new report was released: The Fintech Funding Report, from Triple Bubble and Cut Through Venture.⁵ It has a few key conclusions.

A few companies raised the vast majority of fintech capital

Airwallex raised twice in FY26: a Series G at $498 million and a Series H at $460 million. That is $958 million, and 56% of everything Australian fintech raised all year. Add the $113 million Series A taken by KAST, an Australian-founded stablecoin payments business, and the top three deals are 62% of the total. The top 10 are 91%.

By way of comparison… for the rest of the startup market, the top 10 deals came to 48%. So this is a fintech pattern rather than something happening across venture funding generally.

Six Series B+ rounds in the whole country

Have a look at these numbers:

Stage	FY26 median round	Change on FY25	Round size rank since FY20	Deal count rank since FY20
Angel and Pre-Seed	$2.7m	+93%	Record high	2nd highest
Seed	$2.3m	-43%	2nd lowest	3rd lowest
Series A	$14.6m	+33%	Record high	Lowest
Series B+	$51m	+104%	Record high	Joint lowest

Read the last column first, because I think that’s the key thing. Deal count is a count of decisions to back a company, and unlike the dollar figures it cannot be moved by one Airwallex.

There were 53 disclosed fintech rounds in FY26, the fewest in the seven years the dataset covers. At the FY22 peak there were 156.

The shortfall is not evenly spread. Angel and Pre-Seed had its second-highest deal count in seven years. Seed was average on count, though the size of the median round fell 43% to $2.3 million. Then it drops dramatically: Series A had the lowest deal count in the dataset, and Series B+ was joint lowest at six rounds for the entire country, against 29 in FY22.

Furthermore, fintech’s share of all Australian Series B+ deals has fallen from 49% in FY20 to about 13% in FY26. That’s over six years, and it’s now roughly a quarter of what it was. The report’s own conclusion is that the contraction at later stages is “both absolute and relative to the broader market”, and I can’t see another way to read it.⁶

The money exists but doesn’t reach fintech

Let’s start with the size of it all. Australian superannuation held $4.8 trillion at 30 June 2026, and $3.4 trillion of that sits in APRA-regulated funds run by professional allocators.⁷

Compare that to Australian venture capital, which deployed $5.4 billion across 390 deals in the whole of calendar 2025, and that was its third-largest year on record.⁸

So a year’s output of the entire Australian venture capital industry is about a tenth of one per cent of the superannuation pool.

And very little of it reaches fintech. This is a big point made in the report. Nick Carter, Triple Bubble’s operating partner, on the next opportunity:⁹

“Strong international participation is an important validation of Australian fintech. The next opportunity is to complement that global capital with deeper participation from Australian banks, insurers, and super funds. These are institutions that understand the market and have a strategic interest in the technology reshaping financial services.”

And Judy Anderson-Firth, Triple Bubble’s co-founder, closing the report:¹⁰

“For me, the interesting gap is closer to home. Australia has one of the deepest pools of retirement savings in the world, family offices becoming increasingly sophisticated venture investors, and some of the world’s strongest and most profitable financial institutions. Yet our domestic participation in financing the technology reshaping financial services remains relatively shallow.”

She goes on to call it “an investment opportunity hiding in plain sight”, which sounds pretty apt.¹⁰

Therefore, the obvious question is (and, showing my age, citing Professor Julius Sumner Miller) “why is it so?”

I’ve looked into this and it seems there are two factors at play.

Reason one: super funds are constrained from investing in venture capital due to current benchmarking requirements

These days, super funds face an annual performance test. Underperform the benchmark for long enough and a fund must write to members to explain; and can be closed to new ones. It’s seemingly worked: on Treasury’s numbers the Australians sitting in underperforming products fell from about a million in 2021 to roughly 8,500 in 2025.³

The difficulty is what venture capital gets measured against. Treasury’s May 2026 consultation paper on the test lists the assets poorly served by the benchmarks, and, guess what… it lists venture capital first.³ Its words:

“Venture capital: Investments typically benchmarked against Australian or International Equity benchmarks – made up of listed equity indices, such as the S&P/ASX 300 Total Return Index. These indices are largely comprised of existing mature listed companies which typically have different return profiles compared with venture capital investments for early-stage businesses.”

The paper then explains how this works… venture investments display a J-curve, “with low or negative returns in early years followed by stronger performance as assets mature”, so they “may still appear to underperform in the short to medium term, despite the potential to deliver strong long-term returns for members”. And it cites an estimate that a trustee can sustain only about one per cent of tracking error across a test period before risking a cumulative shortfall that might cause problems.¹¹

So super funds must assess venture capital as an asset class that will read as ‘underperformance’ for years when judged against mature listed companies, and do it inside a one per cent error budget. On that reading, holding very little of it looks like a rational move.

While Treasury is careful not to endorse that reading, a point to which I’ll return, its proposed fix is a new “emerging” asset class benchmarked to CPI plus a margin instead of to listed equities, with venture capital as its worked example.

Reason two: fintech can be further excluded

The main Australian venture capital funds, Blackbird, AirTree and Square Peg among them, are built as Early Stage Venture Capital Limited Partnerships (ESVCLPs), which allow investors to pay no tax on eligible gains (which helps to make high-risk early stage cheques worth writing).

The thing is that a good many fintechs are ineligible for funding through ESVCLPs. The report estimates that 20% of FY26 fintech deals were ineligible, against 3% of non-fintech deals.¹²

The reason is in the legislation. Section 118-425 of the Income Tax Assessment Act lists ineligible activities for ESVCLPs, and its finance limb covers banking, providing capital to others, leasing, factoring and securitisation.¹³ The limitation exists for a reason: the concession is meant for innovation, and the list keeps it away from passive asset ownership and from banks using it to buy competitors.¹⁴ The effect, though, is that fintechs actually providing financial products get caught (while those selling software into financial services do not).

The report notes the consequence of this: “Domestic capital may therefore favour software-led fintech models, while regulated businesses may need to rely on alternative fund structures or offshore investors.”¹²

Amendments made in 2018 were meant to have fixed this. They didn’t quite. Treasury’s own review of the concessions records that fund managers were still declining fintech deals over differing legal interpretations of the rules,¹⁴ and Kate Cornick of the Tech Council puts it plainly in the report: “uncertainty remains for founders and investors about whether a company stays eligible as it moves from building its technology to taking it to market.”¹⁵ Which is the transition every fintech has to make. And Treasury’s proposed Innovative Business CGT Concession, consulted on this year, imports the same exclusions.⁴

I should keep this in proportion. On the Tech Council’s estimate, quoted in the report, ESVCLP accounts for about 11% of Australian venture funding. It is one pipe among several. What matters is the direction it runs.

Conclusion

I should be careful here, because I’m reading a good deal into two sets of rules, and I’m far from the first person to look at this.

For instance, I said I’d come back to Treasury’s position, which does not endorse a causal argument. In the performance test paper it records that some stakeholders question how much of the change in investment behaviour can be attributed to the performance test at all, and that academic work points at other things such as the rise of passive investing, or funds watching what their peers do.³ There’s probably a simpler explanation too: the biggest super funds need to write cheques far larger than any Australian startup can absorb. And of course, the performance test has plainly done what it was built to do: about a million Australians were sitting in underperforming products in 2021 and roughly 8,500 were by 2025. That’s clearly a positive outcome.

Neither rule explains the collapse at Series B+ directly, either. The report’s own reading of that is a thinning pipeline: fewer companies progressing through each stage, so fewer arriving at the growth end a few years later.⁶ Which is also how an early-stage constraint would eventually show up at Series B+, so the pipeline may be the link as much as the alternative.

And nobody actually publishes how much superannuation money reaches Australian venture capital. APRA doesn’t report a venture capital category at all. So I don’t know the size of what may be missing, only that two mechanisms are documented by government as pushing in that direction.

So it’s not as tidy as I’ve made it sound, but having read the report and both consultation papers, I reckon on balance you’d have to say it looks like a bit of a problem.