Venture Credit in Australia — Our first report alongside the Tech Council of Australia

Earlier this year OneVentures undertook research with both investors and founders to better understand the market environment for Venture Credit. We are delighted to share some of the summary findings below — the full report is also available here.

Venture credit has the ability to lower the cost of capital and dilution for founders and investors. While frequently used in the US and EU, it is a relatively new option in Australia, and so we meet many founders & investors who are learning about the product for the first time. We wanted to understand the market dynamics for venture credit and therefore launched a research project with the Tech Council of Australia earlier this year.

The report is based on a survey inviting founders, VCs and other investors to tell us about how they think about credit, and whether they plan to utilize venture credit in the future.

While OneVentures has helped build awareness of the product in Australia, there is still a long way to go.

We’ve highlighted some of our key findings below.

1. While venture credit still nascent in Australia, adoption is increasing. Venture credit is used in 15%–20% of total US VC funding, compared to 2%–4% in Australia.

Nevertheless, we found that the vast majority of investors expect the use of venture credit to grow in the future.

2. Other than Venture Credit, R&D Finance is the most popular form of credit among investors and founders.

3. The most popular use of venture credit is to complement an equity raise or extend runway between rounds.

4. Awareness of venture credit is growing, however there is room to improve.

• Over 70% of VC and angel investors describe their understanding of venture credit as “Good” or “Excellent”. Only 50% of Founders identify the same level of understanding.
• There is more work to do in building awareness within the Founder community to demonstrate how venture credit can be used to lower the cost of capital for businesses.

5. 80% of start ups & scale ups are somewhat likely or very likely to use venture credit in the future.

With growing awareness, there is significant opportunity for venture credit to help founders and investors reduce dilution, lower their cost of capital and accelerate their growth.

You can register for a copy of the full report here.