Australian businesses are facing one of the most capital-intensive periods in living memory. Digital transformation, bringing innovative products to market and preparing for economic decarbonisation are each significant demands on their own. Together, they represent a step-change in investment requirements facing businesses of all kinds.
And yet, the question I hear most often from members is not whether they want to invest — it’s how to access the capital to do it.
The scale of the challenge is substantial. Research commissioned by the Australian Business Growth Fund, published in its 2024 report Powering the Growth Economy, identified a $38 billion equity funding gap for Australian SMEs with revenues between $2 million and $100 million. These businesses represent just six per cent of Australian companies, yet account for 42 per cent of employment, 47 per cent of R&D investment and 26 per cent of GDP. Despite this, 79 per cent report that lack of access to equity funding is holding them back.
At the same time, a suite of government-backed and purpose-built capital vehicles has been established to address precisely this gap. The challenge is that many businesses are not aware they exist, are uncertain about whether they qualify or do not know how to present themselves to best advantage.
The numbers are not small. The National Reconstruction Fund has $15 billion to invest across seven priority areas including renewables and low emission technologies, medical science, transport, defence, value-add in resources, agriculture and enabling capabilities. The Australian Business Growth Fund provides minority equity investment of between $5 million and $15 million to established SMEs through a public-private partnership backed by the Federal Government and six major banks. Social Enterprise Finance Australia (Sefa) deploys its own capital as a specialist lender to impact-led organisations, helping not-for-profits, social enterprises and purpose-driven businesses access finance that mainstream institutions are rarely equipped to provide. The Australian Investment Council connects businesses to the broader private equity and venture capital ecosystem.
Collectively, these vehicles represent a significant commitment to backing Australian enterprise. The question is whether that capital is consistently finding its way to the businesses that need it most.
From what members tell us, the answer is: not always. The issues are practical. Awareness is uneven, eligibility criteria are not well understood and there is often a gap between what a business knows about itself and what a funder needs to see to say yes.
There is a concept that does not get enough attention in policy circles: capital readiness. A business can have strong fundamentals, a compelling product and a credible management team and still be declined — not because the investment case is weak but because it has not been articulated in a way that funders can assess.
Funders are not all looking for the same thing. Knowing the difference between patient equity and structured debt, between a grant and a co-investment and between what a commercial bank will fund versus what a development finance vehicle is designed for is genuinely useful knowledge. It shapes who you approach, what you prepare and how you present your case.
This is the gap Australian Industry Group is working to help close.
Next month on 6 May, Australian Industry Group Chief Executive Innes Willox will host a panel discussion to give members practical insights to access capital.
Mr Willox will be joined by the chief executives of National Reconstruction Fund, Australian Business Growth Fund, Sefa and Australian Investment Council.
Members will discover:
The three themes running through the discussion reflect the investment pressures our members are navigating right now: accessing capital for growth, bringing innovative products to market and preparing for economic decarbonisation.
In the lead-up to 6 May, each of the participating organisations will share their own perspectives on what they offer and how businesses can engage with them.
Australia's policy settings have shifted meaningfully over the past two years. The Future Made in Australia agenda and expanded mandates for public finance institutions represent a genuine effort to direct patient, long-term capital toward productive investment. That is welcome.
But policy intent and business outcomes are not the same thing. The distance between a fund being established and a business drawing on it to scale a product line, invest in clean technology or build a new market is considerable. Closing that distance requires businesses that know how to present themselves and funders actively working to reduce the friction in saying yes.
Our 6 May event — Capital for growth: accessing Australia’s capital ecosystem — contributes to that effort. If you are thinking about your capital strategy for growth, a new product or the transition ahead, this is a conversation worth being part of.
David is Director of Emerging Industries and Innovation at Australian Industry Group.
He has been part of Australia’s innovation ecosystem for more than 15 years and has worked at the executive level across multiple industries in large and small organisations to facilitate innovative solutions to complex problems.
David has maximised opportunities for Australian industry in $88 billion of major projects, delivered financial assistance of more than $22 million to innovative SMEs and pulled together over 150 commercially astute leading-edge research/industry collaborations that have resulted in novel technology and jobs of the future.
