FinTech Australia is calling on the Federal government to address the challenging capital raising environment for startups and renew its support for Austrade’s effort to promote our local sector abroad.
In its pre-budget submission tabled ahead of federal treasurer Jim Chalmers announcing his 2024 Budget on May 14, FinTech Australia CEO Rehan D’Almeida said the peak body outlined a number of measures aimed supporting and bolstering growth in Australia’s fintech ecosystem, at a time when the entire startup ecosystem was witnessing a downturn in fundraising.
“While we understand the core focus of this budget is cost of living measures, our recommendations are at supporting Australia’s next round of prosperity and job creation,” he said.
“Fintech has a key role to play in not only improving the financial literacy and prosperity of Australians, but also in our transition to a green economy. Maintaining the industry’s momentum is crucial in ensuring we see the most benefit from it as an agent of job creation and change.”
Measures FinTech Australia recommended include:
- Targeted initiatives to address capital raising challenges for fintechs and incentivise investment, especially targeting early stage companies
- Expand the National Reconstruction Fund (NRF) initiatives to more clearly capture fintech businesses
- Fund the continuation of fintech trade and investment support
- Targeted incentives to promote the rollout of the Consumer Data Right
- A review and revitalisation of the Enhanced Regulatory Sandbox (ERS)
- Further funding and reinforcement of ASIC to handle an impending influx of licensing applications
D’Almeida said the organisation’s top priorities of capital raising and trade opportunities are issues affecting the entire startup sector.
“The latest State of Australian Startup Funding Report reported a 53% year-on-year decline in startup funding. The fintech industry has been particularly affected, with startup funding down to $331 million in 2023 from $2 billion in 2022 and $3 billion in 2021,” he said.
“As a result, we are also seeing far fewer young businesses and new innovative ideas coming through the pipeline and urgent action is required to increase the amount and diversity of funding available to startups and scaleups.”
D’Almeida said now is the time for the government to review the current policy settings it has in place for early stage fintechs and startups.
“This includes recalibrating and expanding the Early Stage Venture Capital Limited Partnership (ESVCLP) and Early Stage Innovation Company (ESIC) schemes, reviewing regulation on crowdfunding — an industry that has significantly grown and evolved since it was introduced in 2017,” he said.
“We would also caution against proposals which will limit investment and damage investor confidence, such as ASIC’s suggestion to increase the sophisticated and wholesale investor test thresholds.”
He’s also concerned that Austrade’s FinTech Trade and Investment Program (FTIP) is also slated to end this year.
“We’re calling on a renewal of the program, on the grounds that it has attracted millions in trade outcomes and created hundreds of jobs. According to the latest FinTech Census, over one-fifth of all Australian fintechs generate half of their revenue overseas,” D’Almeida said.
“To date, we’ve held an incredibly productive relationship with the Federal government, and both it and its agencies have made significant headway on navigating regulation affecting fintechs. We look forward to continued work alongside them and hope to see support for fintech through the Budget process.”
Trending
Daily startup news and insights, delivered to your inbox.