FinTech Australia calls for capital raising, trade support for industry ahead of federal budget
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 (PDF) tabled ahead of the Federal Budget in May, the peak body outlined a number of measures aimed supporting and bolstering growth in Australia's fintech ecosystem, amid a downturn in capital raising for the entire startup ecosystem.
FinTech Australia CEO Rehan D’Almeida said: “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.”
“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 continued: “While we will continue to work with the Federal Government on various regulatory issues such as the CDR and ERS, our priority is on issues affecting the entire sector. Namely capital raising and trade opportunities.”
“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. 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.”
“As such, 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. 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.”
“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.
“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.”
You can read the FinTech Australia pre-budget submission here.
About FinTech Australia
FinTech Australia is the not-for-profit peak industry body for the Australian fintech sector, representing over 420 fintech companies and startups across the nation. FinTech Australia’s vision is to make Australia the leading market for fintech Innovation and Investment by working with both sides of Government, Industry and the Australian FinTech community to create a supportive environment and partner ecosystem in Australia and abroad.
