How to fund a startup in Australia, stage by stage

Everyone tells a new founder to “raise capital”. Few say that the right kind of money depends on a single question: what can you prove today? An idea, a prototype, three months of sales and three years of accounts each unlock different funding, and picking the wrong source for your stage is how startups end up with a cost of capital they can’t carry.

This guide runs through the stages in order, and what each tends to make available.

What stage are you at?

Stage	What you can show	What usually fits
Idea or prototype	A plan, a founder, maybe a first customer conversation	Savings, family, grants, accelerators
Launched, little revenue	A product in market, early sales	Angels, early stage investors, tax incentives, equipment finance
Trading 6 to 12 months	Bank statements with regular deposits	Unsecured working capital, invoice finance, a business line of credit
Trading 12+ months	Accounts and BAS	A wider set of lenders, including banks

Banks are excellent at lending to established businesses, and when you reach that point it is worth taking their terms seriously because they are often the cheapest. Before then, the table shows where to look.

Should you use your own money first?

Most startups begin with the founder’s money, and for good reason: no one else will price the risk at zero. The question is how much, and where from.

• Savings or redundancy are the lowest-risk source. Set a ceiling you can lose without damaging your household.
• Personal credit cards or redraw are quick but costly if left to run. They also blur the line between you and the business.
• Family and friends can be generous but write it down: amount, what it is (loan or equity), repayment and what happens if it fails.

Keep a founder’s contribution record. When you apply for finance later, being able to show that you put in real money counts in your favour.

What grants and incentives are there?

The first stop is the grants and programs finder on business.gov.au, which lets you filter by state, industry and purpose. A few notes from experience:

• Many grants reimburse you after you’ve spent, so you still need cash to start.
• Some require matched funding, which means you need the other half before you apply.
• Applications take time. A grant is a six-month plan, not a rescue.

Our government grants guide covers how to find and assess them.

The R&D Tax Incentive

If your startup spends on eligible research and development, the R&D Tax Incentive can return a portion of that spend as a tax offset, and for smaller companies the offset can be refundable, meaning cash back rather than only a reduced tax bill. It is not for ordinary product development; the activities must meet specific tests, and registration with the program is required. According to business.gov.au, the government announced changes to the incentive in the 2026–27 Budget, and the program runs under current rules until those changes start on 1 July 2028. If R&D is core to your plan, speak to an adviser who knows the program and check the current rules before committing.

Early stage innovation company incentives

If you’re raising from angel investors, the ATO’s early stage innovation company (ESIC) rules may make your shares more attractive. Investors who buy new shares in a qualifying company may be eligible for a non-refundable tax offset, with separate caps for sophisticated investors and others, and for a capital gains concession on the shares if held for a qualifying period. The company has to meet early stage and innovation tests, and one route is a private ruling from the ATO. This is a conversation to have with an accountant before you start pitching, because it affects how you structure the raise.

How do investors fit in?

Investors give you cash with no monthly repayment, but they take a share of the business and expect a return that most small businesses can’t produce. Think about whether your model actually suits it.

• Angels and early stage funds back companies they think can grow very large. A well-run local service business may be a great business and a poor investment target.
• Crowd-sourced funding is regulated by ASIC and lets eligible companies raise money from many small investors through licensed platforms.
• Accelerators trade equity for money, mentoring and introductions. Read the terms carefully and ask alumni about the experience.

If your plan is a steady, profitable business that you want to own, debt and your own money are more often the right mix than equity.

What debt is available to a new business?

Debt asks one question that equity doesn’t: how will it be repaid? That is why lenders look for trading history or security.

Equipment finance is usually the first accessible debt. The machine, vehicle or fit-out becomes the security, so a lender can be comfortable with a short history, as long as the deposit, the borrower’s own credit and the equipment’s resale value stack up. Our asset finance page explains how it works.

Unsecured working capital becomes available as your bank statements show regular deposits. Lenders assess turnover and cash flow rather than property, and amounts typically range from $5k to $500k depending on history.

Invoice finance fits startups that sell on credit to larger customers, once invoices are being issued.

Property-secured loans can be arranged without trading history because the property carries the risk. That is also the danger. If the startup fails, you may lose the property. Read our guide on the risks of using your home as business security before you go down this road.

Personal loans for business use blur the lines. Business purposes only is a rule for most business lenders, so keep the paperwork clean.

If you’re not sure which of these fits your stage, a short enquiry lets someone talk it through with you.

How should you structure the business to borrow?

Structure affects what lenders see. A sole trader and a company are assessed differently, and a new company’s director is commonly asked for a personal guarantee. Our guide on company vs sole trader for borrowing explains the trade-offs, and the sole trader business loans page covers that route.

Separate bank accounts from day one. Lenders read statements to see revenue, and mixed personal spending makes a young business look messier than it is. See how lenders read your bank statements.

How much should you raise?

Raise enough to reach the next proof point, not the finish line. Common proof points are the first ten paying customers, the first profitable month or a repeatable sales channel.

Work back from your costs:

1. List fixed monthly costs: rent, wages, insurance, software, loan repayments.
2. Estimate sales per month, then halve it, because first estimates run optimistic.
3. Multiply the monthly shortfall by the months to reach the next proof point.
4. Add a buffer of at least one extra month.

Our 13-week cash flow forecast guide turns this into a tool you can update every week.

A worked example (illustrative)

A founder opens a mobile coffee van business. Costs: a converted van and espresso machine at $78k, licences, branding and stock at $9k, and three months of living costs and fuel at $18k.

Source	Amount	Notes
Founder’s savings	$20k	Covers licences, stock and deposit
Equipment finance	$70k	Van and machine are the security
Family loan, written agreement	$10k	Repayments begin after month six
Cash buffer from savings	$5k	Held back, not spent

After eight months of steady trading, the owner has bank statements showing regular deposits and applies for a $40k working capital facility to add a second van. The first van’s track record, not a forecast, is what makes the second raise straightforward. The founder never needed investors.

Mistakes to avoid

• Raising everything at once. Money you don’t need yet costs something.
• Mixing personal and business money.
• Using property security before testing demand.
• Counting grants before they are approved.
• Skipping the buffer. Launches almost always take longer and cost more.

Matching the money to where you are

You don’t need a perfect pitch to find out what is available. You need accurate numbers about what you’ve spent, what you’ve earned and what you need next.

Tell us about the business, how long it has been trading, if at all, and what you plan to fund. The enquiry takes a minute or so and doesn’t involve a credit check. We don’t blast your details across a pile of lenders; an experienced person reads your situation and calls. Give honest, accurate answers and the first option we suggest is far more likely to be the right one.

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