Capital is the lifeblood of start-up fintechs and a fundamental key to success is the ability to raise funds and then manage burn rate each month. A number of points can be made about both the access to capital and the management of expenditure of the funds.

  • Shallow but growing pool in Australia... The funding of start-ups is a challenging and complex issue as they need phases of capital stretching over many years. Venture capitalists want early stage uncapped upside and various profiles of yield. Feedback from the in-depth interviews with fintech leaders suggests that the capital situation has been improving with more inflows of venture capital coming from within and outside Australia.
  • Investor patience and flexibility... The evolving and iterative development of the start-up product concept itself demands a flexible and patient investor. In many ways, the capital funding selection is as critical as the development challenge itself. The two most popular forms of commercial funding include sourcing capital from strategic corporate investors and venture capitalists.
  • Mixed capital raising success... Although successfully funded fintechs outnumber those that fail to raise capital or couldn’t raise what they desired, this doesn’t account for organisations that may not be in existence anymore. Views in this Census were primarily collected from fintechs that remain in existence so there is a skew to fintechs that were successful in their capital raising. Fintechs that have accessed commercial funding are more likely to have raised the amount of capital required.
  • Solid averages... Of those fintechs that indicated they have successfully raised capital to date, on average each has raised $4.1m. This is an increase on what was seen in 2016 ($3.9m raised) and is indicative of a maturing industry. Fintechs in existence for more than three years have on average raised $5.2m of capital to date in comparison younger fintechs aged one year or less have raised on average $2.1m of capital to date.
  • Private funding dominates... As was seen in 2016, most fintechs in Australia have received some private funding (72%). Six in ten (57%) accessed some commercial funding and on average have raised $4.2m in capital; this is greater than the average amount of $2.2m raised by fintechs that exclusively accessed private funding.
  • Realising profit... One in seven fintechs stated that they are currently profitable. Of those that have not started to realise profit, their current burn rate is on average $115k a month. This is an increase in what was seen last year where the burn rate was $84k month.
  • Managing burn rate... Average burn rates are particularly high among fintechs that have received funding and scaling up their business, with the increased burn rate reflecting the maturing of Australian fintechs. While nearly 30% of fintechs have a monthly burn rate in excess of $100k, the majority of these businesses are skewed towards having raised in excess of $10m in capital to date (i.e. larger, more funded fintechs). For this segment, the remaining runway is typically more than a year, but there is still a sizeable proportion (37%) that only have up to a year before the cash reserves dry up.

Filters

FinTech Australia membership
Location
Company maturity
Number of employees
Company stage
Company funding

Attempts at raising capital

2016 2017
Met expectations
Did not meet expectations
Q15C. Has your company tried to raise capital?
Base: All respondents (n=)

Scale of last capital funding

2016 2017
Average $m $m
Median $m $m
Q16B. What was the size of your last round of capital funding?
Base: Have raised or currently raising capital excluding not applicable (n=)

Capital raised to date

2016 2017
Average $m $m
Median $m $m
Q16A. Approximately how much capital has your company raised to date?
Base: Have raised or currently raising capital (n=)

Source of capital

2016 2017
Private funding
Commercial funding
Q14C. How is your company funded?
Base: All respondents excluding 'prefer not to say' (n=)

Source of capital

Q14C. How is your company funded?
Base: All respondents excluding 'prefer not to say' (n=)

Monthly burn rate

2016 2017
Average burn rate
(excl. profitable fintechs)
$k $k
Q17A. What is your current burn rate per month?
Base: All respondents (n=)

Runway left at current burn rate

Q17B. Approximately, how many months of runway do you have left at your current burn rate?
Base: All respondents (n=)