Australia’s impact startup sector has demonstrated remarkable resilience despite a broader venture capital downturn, finds a new report from Giant Leap in collaboration with startup data provider Cut Through Venture.
The newly released Impact Startups Benchmark Report 2025 reveals that while total startup funding volumes have dipped across the broader ecosystem, investor conviction around impact is strong. Startups solving problems in Climate, Health and People are steadily growing their share of early-stage investment.
The report draws on proprietary data from Giant Leap analysis of more than 2,800 startup deals over the past three years and a cumulative 10,000 companies over Giant Leap’s history. It also correlates this with Cut Through Venture’s broader industry data.
Key findings:
- Impact sectors have shown resilience in volatile markets
- Climate is the dominant theme in Australia
- Health investment is steady, but digital health faces hurdles
- Investment in Edtech and HR Tech remains subdued
Strong and sustained investor conviction
The Australian impact startup ecosystem demonstrated resilience through the challenges of 2023 and 2024 — a period that marked a downturn from the investment highs of 2022. And while funding to impact startups declined in absolute terms, investment in startups in Climate, Health and People as a proportion of overall funding increased.
“The fact that impact startups have steadily grown their share of early-stage investment, signals strong and sustained investor conviction in the impact sector,” Rachel Yang, Partner at Giant Leap said.
Climate Tech well supported
Climate Tech saw particularly strong support, attracting the largest portion of capital across the three years surveyed, reflecting the growing maturity of Climate as an investment area. Climate-focused startups ranked among the top-funded sectors, receiving $1 billion in 2024 — more than double the investment in Health and five times that of People-related ventures.
This surge was attributed to strong corporate demand, regulatory tailwinds, and maturing technologies in areas such as carbon sequestration, energy storage and climate adaptation. The report also pointed to Policy support, through initiatives like the National Reconstruction Fund and the introduction of mandatory climate disclosures, as helping to create clearer demand signals and de-risk investment.
Yang said, “With greater policy certainty following the recent federal election, we expect climate tech investment to continue gaining momentum. The government’s ongoing commitment to long-term clean energy targets and public funding is set to attract more institutional capital into climate-aligned assets, strengthening the sector and driving green jobs and innovation.”
Biotech leads Health investment
Health investment in Australia remained steady in 2024, with biotech attracting the most capital reflecting sustained demand for new therapies, rapid advances in AI-driven drug discovery and strong return potential from breakthrough innovations.
Digital health faced headwinds due to commercialisation challenges and complex reimbursement dynamics, but long-term drivers like chronic disease and an ageing population continue to anchor growth.
Caution around People-focused sectors
People-focused sectors, particularly edtech, human resources, and diversity and inclusion-related innovations faced a sharp pullback, reflecting investor caution around long sales cycles and tightening customer budgets.
Yang commented: “HR-tech has faced a number of challenges over the last two years as businesses have cut budgets and spending. However we have seen an uptake of solutions which can improve employee outcomes and reduce risks as shown by our recent investment in Foremind.
“Whilst EdTech has historically received lower funding we are seeing increased interest in the sector as AI is opening new opportunities and tools for personalised education.
“These periods, when funding tightens and sentiment weakens, often present the best opportunities to invest.”
The report suggests that innovation in AI, especially in education, may refresh investor interest in this sector.
“We’re also excited for the potential of AI in tackling real human challenges,” added Yang. “Today’s capital is flowing rapidly toward AI that monetises attention, often with little discernment between fleeting novelties and genuine solutions. But over time, we believe this trend will correct, and lead to some truly innovative and groundbreaking businesses.”
Investment steady with a strong pipeline to come
Investment in Climate, Health and People has remained mostly steady across all stages, with the exception of Series A, which has contracted for two consecutive years.
Like their global counterparts, Australian VCs have become more conservative with follow-on funding. The report found that Series A rounds — often the first substantial institutional cheque — have been delayed or downsized as investors demand clearer unit economics and more proven revenue models. This reflects a shift from growth at all costs to a focus on capital-efficient scaling.
Additionally, deal count in Climate, Health and People is increasing at the Accelerator / Angel stage and Pre-Seed stage, indicating a strong pipeline to come.
The full Impact Startup Benchmark Report 2025 can be found here.
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