Despite all the challenges facing Australian businesses right now, 80 per cent of Australian startups feel optimistic about their prospects next year – though investment and R&D are still key challenges.
So says a recent survey by Angel Investment Network, the world’s largest online angel investment platform.
Of the start-ups polled, 48 per cent said they were “very optimistic”, while 31 reported being “quite optimistic”.
Securing investment a key challenge
Of the start-ups surveyed, 71 per cent said securing investment was a challenge. Many seemed to be lacking knowledge about how to engage investors; only 55 per cent said they had a “good understanding” of how to deal with investors and structure a deal. Almost a quarter (24 per cent) reported a “quite weak” understanding of what these processes should look like.
Another problem for start-ups is an apparent mismatch between expectations and reality, when it comes to funding. Half of start-ups said it took longer than they thought to get funding. Almost the same proportion (41 per cent) said that their funds ran out sooner than they had expected.
“Our survey…reveals a gap between expectations and the reality of fundraising,” said Mike Lebus, co-founder of Angel Investment Network.
Of those who did successfully fundraise, 30 per cent said that their profitability was what led investors to back them. Other factors included scalability of their business (26 per cent), their team (14 per cent) and revenues (eight per cent).
Hiring, R&D, and mental health all challenges
Other challenges faced by start-ups included hiring, R&D processes, and mental health.
A total of 35 per cent of start-up founders reported having difficulties hiring the right talent, while 31 per cent struggle with product innovation and development.
Over half (54 per cent) said that their mental health has been impacted by running a start-up. Just under a quarter (24 per cent) find work-life balance a challenge.
What can the government do to help?
It’s a question ISB asked small businesses just last week – and many of the answers we received were echoed by Angel Investment Network’s survey respondents.
Over three-quarters (78 per cent) of start-ups surveyed believed access to grant funding would help them. Increasing tax relief for start-up investors was mentioned by 55 per cent. Meanwhile, 35 per cent believed R&D tax refunds should be more generous.
With the next federal election on the horizon, start-ups are hoping that whoever is elected will keep them smiling next year.
