Australia’s deep tech funding drought might be ending

Established in January 2024 by previous Tesla engineers Jay Manley and Sam Paterson, MP Space develops power systems for spacecraft, hardware currently developed into more than 500 spacecraft and objectives, with its very first flight heritage anticipated in the last quarter of 2026.

“Our thesis is easy: the next generation of spacecraft will require a lot more power, and the area market requires much better methods to produce, shop and handle it,” states Manley.A pattern, not a one-offMP Space’s raise isn’t occurring in seclusion. Over the previous year, a string of Australian hardware and deep-tech start-ups have actually closed seed rounds well above the regional average. Defence autonomy start-up Breaker raised $9 million in seed financing led by Bessemer Venture Partners, a round apparently 3 times the size of a normal Australian seed raise. Sydney quantum picking up start-up Deteqt closed a $5 million seed round led by Main Sequence Ventures to scale diamond-chip production for defence navigation, after Main Sequence had actually currently backed its $750,000 pre-seed round the year before. Robotics information analytics business Alloy protected $4.5 million in pre-seed financing led by Blackbird, with assistance from AirTree and United States robotics financier Xtal Ventures.

The pattern appears in the wider numbers too. Hardware, robotics and sensing unit start-ups raised an approximated $303 million in the very first quarter of 2026 alone, and according to Cut Through Venture’s Q2 information, Australian start-ups revealed $1.7 billion throughout 64 rounds in the exact same quarter, with capital significantly streaming into hardware, environment and robotics together with AI.Why now

Part of the shift has to do with where the capital itself is originating from. Significant Australian VC funds have actually been raising record quantities this year: Blackbird closed a $1.05 billion fund, Square Peg closed $650 million throughout 2 cars, and Main Sequence, the CSIRO-linked deep-tech expert fund, is presently targeting $400 million for its 4th fund. More capital sitting with funds that currently have a deep-tech required suggests more of it ultimately discovers its method to hardware creators.

There’s likewise a view, reported by Forbes Australia, that financiers are moving cash towards deep tech and hardware partially out of care about software application. With AI making it simpler to construct completing software rapidly, some financiers stress it’s deteriorating the competitive “moat” that utilized to secure software application start-ups, making capital-intensive, hard-to-replicate hardware companies relatively more appealing once again.

Federal government co-investment has actually likewise played a peaceful however material function. A number of deep-tech creators have actually indicated National Reconstruction Fund co-investment as a consider closing personal rounds, the reasoning being that federal government support de-risks the financial investment enough to bring personal capital to the table. MP Space’s own 2 years as a citizen of the NSW Government-backed National Defence and Aerospace Hub at Cicada Innovations fits the exact same pattern, a structured, government-linked path from early-stage research study assistance through to a fundable business.

The difficulty that hasn’t disappeared

None of this indicates the space has actually closed. Deep-tech business generally require $5 to $10 million in early financing and an additional $20 to $30 million to reach commercialisation, a scale couple of Australian VC funds can compose alone without breaching their own concentration limitations. Market commentary continues to explain a “valley of death” in between early research study grants and the point where a business can show sufficient business traction to draw in severe personal financial investment, a space Europe has actually attended to more straight through committed deep-tech public-private financing automobiles.

In the meantime, Australia’s response appears like a mix of bigger expert funds, more worldwide financiers going to compose a very first Australian cheque (as Seraphim Space has actually simply done), and federal government co-investment programs created to de-risk the earliest, most costly phase of hardware advancement.

Blackbird’s Samantha Wong frames MP Space as a test case for whether that mix can work. “As area opens more usage cases, MP Space is well-placed to take the chance with an unassailable hardware benefit and deep software application abilities,” she states. “It’s an Aussie service redefining the international requirement.”