Start-ups are struggling with financial operations, with 33 per cent having turned to their parents for their financial lifeline.
So says the inaugural Startup Financial Confidence Report, released by the Australia-founded financial platform Airwallex. The Report seeks to uncover the opportunities and business challenges facing Australian founders right now. Touted as the largest study of its kind in Australia, it surveyed 500 start-up founders across Australia.
Start-ups aren’t happy with financial providers
92 per cent of the surveyed start-ups have concerns about their business’ financial operations, particularly in terms of compliance. In addition, 87 per cent are concerned with their bank or financial provider, with 37 per cent saying the flexibility to access funds is a deciding factor when considering a business bank or provider.
Particularly, founders shared that the major complaint they have against banks/financial providers was the lack of financial products and services designed for their needs as a start-up (shared by 44 per cent of the respondents), followed by high fees (37 per cent), poor understanding of needs as a start-up (37 per cent), and inadequate flexibility to access funds (35 per cent).
In addressing these financial concerns, almost all founders (98 per cent) are seeking financial advice for their businesses. In fact, 40 per cent shared that they are looking to their professional networks for financial advice, second only to external finance consultants (41 per cent).
Low funding, but high confidence
Many start-up founders report turning to unconventional sources to address their financial challenges. In particular, 33 per cent have turned to their parents or “the Bank of Mum and Dad” for their financial lifeline.
Despite their tenuous financial position, 78 per cent of founders feel bullish, saying that they are likely to expand their business globally in the next 12 months. However, 90 per cent say there are limitations to them doing so.
Taylor Fox-Smith, Head of Community Partnerships at Airwallex, said that despite the thriving sector, there’s a confidence gap when it comes to steering the finances of a start-up.
“In today’s volatile economic climate, where funding cycles are tightening and global markets are uncertain, these findings not only illuminate the current challenges but also show the other side of the coin – highlighting opportunities for start-ups,” said Fox-Smith, who is pictured above.
“We know there’s a real appetite from founders for support across various areas such as funding and operations,” Fox-Smith added. “We are confident these insights will empower an ambitious cohort of current and future start-ups and the next generation of Australian unicorns.”
