What hasn’t been surprising, is the willingness of founders to look towards alternative strategies to ensure their business continues to meet their high-growth objectives. The increasing awareness of alternative funding sources has come somewhat out of necessity, with many founders turning to different pools of capital to extend their runways and fulfil their high-growth objectives.
One of the more attractive types of capital to any founderis non-dilutive capital. The term “non-dilutive” is in reference to the idea that raising this type of capital does not “dilute” the ownership interests of existing shareholders. This type of capital can come in various forms, one ofthe main forms being debt. The challenge for founders of businesses that are early-stage,high-growth and R&D intensive is that they often fail to 'fit the mould' for traditional private credit providers.
The news is not all bad! The emergence of R&D Finance as credit is structured solely to meet the needs of businesses who have a turnover of less than $20m and who are accessing the Australian Government’s Research and Development Tax Incentive.
Depending upon the way the loans are structured, the finance could be used in the following ways:
a. Once off loans for the purpose of achievingshort-term tasks or objectives with the intent of maximising the value of thebusiness prior to going to the equity markets or completing an exit.
b. Pay off short-medium term obligations
c. Project finance
a. Smooth cashflows across the year
b. Reduce capital outlay over the course of a project
c. Reinvest up to 150% of Q1 R&D expenditure
If you are interested in hearing more about R&D Finance and how it’s relevant to your business, reach out to us and our team will happily have a chat with you about your options!
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