How are Australia's emerging tech companies funding their growth?

Australian business leaders are increasingly realising their success won’t just be enhanced by their digital investment, it’ll be defined by it. To capitalise on this, tech companies are turning to new options to fund their growth and outpace their rivals.   

It's a good time to be a tech company. At Macquarie Business Banking, we engage with companies through the lifecycle of their business. We see and support what companies do to unlock their potential, and to drive themselves from an emerging to a competitive force in a market ripe with opportunity. We are confident growth-focused tech companies can succeed in this landscape, backed by a long track record of the sector’s innovation and resilience.   

Fuelling the growth engine

Macquarie Business Banking’s 2021 Technology Pulse Check[1] shows the Australian tech sector is confident in its capacity to grow in a recovering economy. On expansion prospects, tech companies have had a running start, with profit and revenue figures benefiting from a mass migration to remote working environments during the pandemic, which continues today.

“Australian technology innovators found new applications for their products, and pivoted to solving problems, which created opportunities,” explains Evan Hinchliffe, Industry Lead for Technology, in Macquarie’s Business Banking division.

Technology businesses have forecast solid revenue and profit results by playing to their strengths, while seeking outside support and growth opportunities. Accessing growth capital is simultaneously one of the biggest challenges for tech companies and one of the areas they are heightening their focus on.

With the likes of Seek and Carsales before them, we see that growth-focused companies are turning to debt funding (or cashflow lending) to solve their capital constraints. While this was once only available to select corporates, and sometimes considered the domain of Silicon Valley’s unicorns, it is becoming increasingly available to tech companies in their early growth stages.

Three historically common methods of accessing funding include bootstrapping, where growth is funded from a founder’s personal cash reserves (or a credit card) and through current revenues; property-backed loans, where property, often the family home, is security; and raising new equity such as through angel investors or venture capitalists. We refer to debt funding as the emerging ‘fourth way’ of funding innovation, one which uses a business as security and can be significantly faster and more affordable than more traditional methods of sourcing growth capital.

The ‘fourth way’ in action

Just as the tech sector has evolved to be more about strategy than machines, Macquarie Business Banking focuses on successful working relationships, not just transactions. Funding is a critical part of the growth equation, but understanding a business’ needs, vision and the market they operate in is equally important.

The partnership between Macquarie Business Banking and Mirus Australia is an example of this philosophy in action. Mirus was founded in 2010 and has a dedicated focus on the needs and challenges in aged care. The company has developed three leading software platforms helping providers manage their revenue, admissions, and workforce.

Since inception, Mirus has grown to over 50 employees and over 125 clients, plus has recorded stellar results inclusive of its workforce management platform recording 340% growth last year.

“When we first engaged with Macquarie, having someone who understood technology and the development lifecycle was really important, because most bankers didn’t understand it before,” says Mirus co-founder James Price.

With its heritage in investment banking and having a shared agenda for its customers’ success in its DNA, Macquarie Business Banking is a leading provider of debt funding to Australian tech companies. 

“Although Macquarie Bank partners many of Australia’s top technology businesses, we add greatest value over the entire lifecycle of the business relationship,” says Hinchliffe.

“We treat even small businesses as if they’re big businesses, because that’s what we want them to become.”

This information is issued by Macquarie Business Banking, a division of Macquarie Bank Australian Credit Licence 237502. It doesn’t take into account your objectives, financial situation or needs, nor is it intended as a substitute for any accounting, tax or other professional advice, consultation or service – please consider whether it’s right for you.