Global tech investment shifts: Australia’s strongest opportunities in 2025

2025 has been an eventful year for the global technology sector. As the sector rebounds from recent economic headwinds, tech investors are recalibrating their strategies. 

Across Europe, North America, and the Asia-Pacific, investor sentiment is shifting toward sustainable growth, operational efficiency, and innovation-led scalability. In this evolving landscape, Australia’s resilient tech ecosystem is playing an increasingly prominent role. 

Australian technology stocks surged at the start of 2025, spurring M&A and capital activity. While US import tariffs triggered volatility, tech indices rebounded on AI adoption and digital infrastructure investment. The S&P/ASX All Technology Index rose +6% (1 month), +27% (3 months), and +20% (12 months).

Global tech trends: A return to strategic discipline

Globally, tech M&A activity is recovering, driven by stabilising interest rates, increasing geopolitical clarity, and a renewed appetite for high-quality assets. Private equity firms are leading the charge, favouring businesses with strong recurring revenue, high customer retention, and scalable platforms. Accordingly, due diligence is focusing more on unit economics and long-term ROI.

Top investment themes:

• AI
• Cyber security
• Vertical SaaS (Software as a service)

The Australian tech landscape is increasingly attractive to global investors

Australia’s tech sector has shown remarkable resilience. Despite global volatility, mid-market deal volumes in the Australian technology and IT sector rose by 6% in 2025. Valuations remain strong, with software businesses commanding median EBITDA multiples north of 10x, reflecting investor confidence in scalable, recurring revenue models.

International interest is surging. Many mid-market IT deals in the past 18 months involved buyers from the US, UK, South-East Asia and Canada. The lower Australian dollar and stable political environment have made Australian assets particularly attractive to offshore investors.

Investors want revenue visibility and scalable models

Investors are increasingly focused on predictable, recurring revenue and customer retention rates. Key metrics for valuation discussions include:

• Annual Recurring Revenue (ARR)
• Monthly Recurring Revenue (MRR)
• Net Revenue Retention (NRR)

Products and services sold through subscription-based models and long-term contracts are highly prized and valued, offering top line visibility and stability.

Customer lifetime value (CLV) has emerged as a key metric in assessing the long-term profitability of tech companies. Investors are scrutinising how effectively businesses retain customers and generate expansion revenue through upselling and cross selling of complementary products and services. 

Another metric of note is customer retention. Companies with strong customer retention strategies and metrics to prove it generate higher value on exit.

Valuation complexity has increased due to higher capital costs and variable business models. To bridge valuation gaps, it is important to align incentives between buyers and sellers. We have seen an increase in earn-out provisions and deferred payment structures used for this purpose. 

Innovation themes driving investment

Four key innovation areas are shaping investor interest:

1. Generative AI – AI-native businesses are attracting premium valuations, especially those with scalable, data-rich platforms.
2. Cyber security – Regulatory pressures and high-profile breaches have made cyber security a top priority.
3. Vertical SaaS – Software tailored for specific sectors delivers significant value and high retention.
4. Quantum Computing – Though still emerging, it is gaining traction among forward-looking investors.

As part of due diligence, buyers now demand granular insights into unit economics, pricing models, customer metrics (e.g. ARPU, CAC, CLV, NRR and GRR), and long-term ROI.

Private Equity’s strategic role

Private Equity firms are investing and shaping the market. Their buy-and-build strategies target niche technologies with strong cross-sell potential. Infrastructure-oriented technology, such as energy and government IT systems, is particularly attractive due to low churn and high revenue visibility. Cross-border partnerships and minority investments are also emerging as strategic alternatives to full acquisitions, helping navigate regulatory complexities while enabling international expansion.

What do buyers look for in Australian tech companies?

Buyers—both domestic and international—are targeting Australian tech firms that demonstrate:

• Capital efficiency - Australian startups are known for bootstrapping and robust capital management.
• Recurring Revenue Models - SaaS platforms and subscription-based services are highly valued for their predictability and scalability.
• Strong technical foundations - Investors favour businesses with robust architecture, scalable infrastructure, and global-ready platforms.
• Talent and IP acquisition - Acquiring Australian tech firms often means gaining access to skilled teams and proprietary technologies.
• Global mindset - Companies with international application and traction and expansion strategies are especially appealing.

Sector highlights in Australia

• Cyber security - With Australian businesses prioritising cybersecurity, AI-driven security tools are in high demand.
• Generative AI - A growing level of Australian companies plan to integrate GenAI into operations, driving investor interest in AI-native platforms.
• Climate tech - Despite global declines, Australia’s climate tech investment has remained resilient, with a strategic shift toward fewer, larger deals.
• Quantum computing - Australia is positioning itself as a hub for quantum innovation, with QCaaS models gaining traction.

M&A outlook

Australia’s M&A market is expected to strengthen in the second half of 2025. Key drivers include:

• Private equity deployment - Dry powder is being strategically deployed, with PE deal volumes increasing significantly.
• Cross-border activity - International buyers are paying premiums, drawn by favourable currency rates and high-quality assets.
• Regulatory changes - New merger control laws coming in 2026 are accelerating deal timelines, prompting early strategic moves.

Global tech investment and Australia: What to expect

Australia has developed into a strategic hub for global tech investment. With a reputation for strong governance, capital efficiency, innovation, and resilience, Australian tech companies are attracting attention from buyers seeking scalable, high-quality assets.

As a result, we envisage seeing the continuation of strong deal flow in the sector for the remainder of 2025 and well into 2026.

Should you have any questions, please feel free to reach to Glyn Yates or the National Technology team at RSM Australia.