When the Australian Business Growth Fund (ABGF) commissioned Powering the Growth Economy, Australia’s first dedicated study of established SMEs with revenues between $2 million and $100 million, the Fund set out to better understand the funding challenges facing growing businesses.
What it uncovered was bigger than expected: a $38 billion equity funding gap.
For profitable, established business, accessing growth capital is harder than it should be.
The businesses caught in this gap are some of Australia’s most productive and ambitious enterprises.
Together, the Growth Economy represents just 6% of Australian businesses, yet it accounts for 42% of employment, 47% of research and development investment and 26% of GDP.
These are businesses with customers, revenue and momentum, and nearly 80% of them told us that lack of access to equity funding is limiting their growth.
This is why ABGF exists.
Many business owners ask the same thing: “We’re profitable. We have a strong team and a clear plan. Why is raising capital so difficult?”
Venture capital focuses on early stage and unprofitable high risk startups. Private equity typically looks for larger businesses and controlling stakes. For established SMEs that have made it through the hard early years and are now ready to scale, there has historically been few places to turn.
ABGF was created specifically for these businesses.
The Fund invests between $5 million and $15 million in profitable, established SMEs (with the ability to provide follow-on capital) in return for a minority equity stake of up to 49%.
That minority position matters.
Founders stay in control of their business. ABGF backs their ambition; it doesn’t replace their leadership.
Supported by the Australian Government and six of Australia’s leading banks, ABGF is the only dedicated growth capital fund purpose-built for the SME sector.
ABGF’s investee businesses use growth capital in different ways: entering new markets, developing new products, funding acquisitions, managing succession or strengthening foundations for the next phase.
What they have in common is ambition and the need for a capital partner willing to take a patient, long term view.
So far, ABGF has invested $218 million across 14 initial investments and 18 follow on investments, supporting businesses across aviation, logistics, renewable technologies, advanced manufacturing, healthcare, professional services and more. These businesses are located across the country, from regional Western Australia to the Hunter Valley, proving this is a national challenge with a national opportunity.
For most growing businesses, capital alone isn’t enough.Alongside its investment, ABGF connects businesses to a network of experienced growth advisors, board members and entrepreneurs who understand what it takes to scale. For many founders, having access to the right advice at the right moment is just as valuable as the capital itself.
This is what purpose-built, patient capital can offer. It’s a partnership with shared incentives and a long term commitment to success.
The funding gap is a market failure. ABGF’s research shows that closing this gap could unlock up to 24.5% revenue growth across the Growth Economy.
Understanding where a business fits, what funders are really looking for and how to position your business well can make all the difference.
That’s why ABGF is working to make access to growth capital clearer and more transparent.
