Revealed: Where Australian start-ups are getting their funding

According to research released this week, Australia lags many other major economies when it comes to the extending of credit to small businesses, despite the comparative health of our economy.

Start-ups are regularly frustrated in their attempts to secure funding, whether that’s from a risk-adverse bank that wants you to put your house on the line, or an investor who wants you to prove that you have runs on the board, despite the fact you need the money for precisely that reason.

However, despite the doom and gloom, there is money out there. And it’s not all tied up in funky tech start-ups either.

“Traditional bricks and mortar retail and manufacturing will never be toast, they are just going through a transition period that is forcing them to adopt more efficient models and are forcing out businesses that do not make the necessary adjustments,” says Tony Glenning, investment director at Starfish Ventures.

“At the end of the day, people will still need cars, furniture, food, and clothing. Entrepreneurs looking to get into these industries should look at sources of funding from angel investors, incubators, family and friends, and of course banks are an option.”

So what are investors looking for?

Glenning says: “Venture capitalists prefer to invest in ‘entrepreneurial businesses’.”

“Regardless of their size it is more about potential for growth. As a general rule, unless a business can offer the prospect of significant turnover and capital growth within five years, it is unlikely to be of interest to a venture capital firm.”

It’s fair to say that there have been several noticeable trends in terms of what kind of business investors are looking for in recent times.

Andrew Stead of business incubator ATP Innovations has compiled a fascinating list of investments in Australian start-ups, to chart exactly where the money is going. While it’s not exhaustive (banks, crowdfunding platforms and certain incubators, such as the York Butter Factory, haven’t been included), it certainly provides an insightful snapshot of the funding landscape in Australia.

To see our great infographic on how Australia’s start-up investment has been spent, click on the image below.