AI frenzy drives uneven startup funding surge

InvestorDaily

Funding for Australia’s startup ecosystem has kicked off its strongest year since 2022, with $1.8 billion raised in the first quarter of 2026 – up 63 per cent year-on-year – but the rebound is highly concentrated, with AI-first and AI-enabled companies accounting for more than half of all deals. According to Cut Through Venture’s quarterly Australian startup funding report, the trajectory is now tracking well above every post-boom year and marks the second-fastest Q1 start in the past seven years, behind only the 2022 peak. “The first quarter of 2026 got off to a flying start, with a $1.8 billion raised across 81 venture deals and 26 accelerator rounds.”

However, while the market has clearly reopened, it is far from broad-based. Capital is flowing, but investors are increasingly selective about where it lands. A handful of large deals drove the headline result, with the top 10 transactions accounting for almost 60 per cent of total funding. “The first quarter’s $1.8 billion result wasn’t really a sign of whole market exuberance. The topline number was mostly thanks to a few extremely large investments that made a big impact.

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