Short answer — as of late October 2025 Australian VCs are concentrating on: AI (both standalone and AI-enabled products across verticals), climate / clean‑tech (including energy, storage, green hydrogen and industrial decarbonisation), healthtech & biotech, fintech (renewed deal activity), deep tech / semiconductors and AI infrastructure, and a continued emphasis on early‑stage deals, micro/specialist funds and diversity/impact mandates. (KPMG.com)

Expanded — what that looks like in practice

• AI everywhere: VCs expect AI to be a baseline feature for new software and product roadmaps; they’re backing both pure‑play AI startups and legacy sectors embedding AI (enterprise SaaS, adtech, industrial/edge AI). Global and local reports show AI remains the dominant theme shaping deal flow. (KPMG.com)
• Climate / clean tech: growing allocations to renewables, storage, green hydrogen, circular economy, carbon removal and industrial decarbonisation — often with larger, capital‑intensive follow‑on rounds and some government derisking. PwC and market coverage highlight climate tech as a key focus (though investment patterns can be lumpy). (PwC.com.au)
• Healthtech & biotech: continued investor interest driven by strong local research capability and several notable exits and rounds in drug discovery, medtech and digital health. (AInvest.com)
• Fintech resurgence: after a quieter period, fintech deal activity has picked up in 2025 — payments, B2B finance stacks and regtech remain attractive. (theinvestorstandard.com.au)
• Deep tech, semiconductors and AI infrastructure: more capital going to chip design, edge compute, and data‑centre/AI infrastructure plays (domestic AI infrastructure projects and specialised chip/robotics startups). (TechStory.com.au)
• Stage & fund structure changes: a tilt back to seed / early‑stage investing, growth of micro‑VCs and sector specialist funds (<$50m) run by experienced founders, and increased institutional LP interest in larger Australian funds. (Cockatoo.com.au)
• Impact, diversity and selective pullbacks: many funds now publish diversity/impact commitments and target more female and Indigenous founders; at the same time some impact categories (e.g., edtech/future‑of‑work) have seen funding decline. (Cockatoo.com.au)

Implications for founders and LPs

• Founders: emphasize credible AI/ML differentiation (if claiming AI), show capital efficiency and clear paths to revenue in climate/biotech, and expect more rigorous due diligence at early stages. (theinvestorstandard.com.au)
• LPs: are increasingly allocating to specialist Australian funds, but expect concentration in a few sectors and longer timeframes for capital‑intensive climate and deep‑tech bets. (AInvest.com)

If you want, I can:

• pull specific recent deals and fund raises (last 6–12 months) to illustrate each trend, or
• produce a short list of active Australian VC funds that lead in each area (AI, climate, health, deep tech).