R&D finance is safe harbour for fintechs in COVID-19 storm

Radium Capital has seen a 44% jump in the number of fintechs applying for R&D finance advances over the past 12 months, with new inquiries from the sector accelerating in the wake of the COVID-19 pandemic.

Radium Capital Chief Executive Officer Cameron Owens said before the crisis R&D advances were growing in popularity as fintechs sought new ways to fund their tech R&D.

“Now advances have become a lifeline after traditional finance markets tanked amid coronavirus fears,” Mr Owens said.

“Typically only about 28% of start-ups claim the R&D tax incentive each year, and just a fraction have R&D advances on their radar to access their refund early.

“Now we’re seeing that change.”

Since March 2019, Radium Capital’s advances have leapt by 119% year-on-year across the board, with the number of Radium Quarterly Advances doubling compared to this time last year.

“The uptick in quarterly advances across the sectors we support is another new development,” Mr Owens said.

“Quarterly advances are designed to provide consistent cash flow every quarter, rather than a single hit of capital.

“The quarterly advance model also makes R&D expenditure go further, because it triggers additional tax refunds.

“Some fintechs are now viewing quarterly advances as a steady and longer-term capital option to help them through the months of uncertainty ahead.

“Before this health emergency struck, we had a vibrant fintech sector in Australia that was punching above its weight.

“We need to work together to keep the sector strong and position it for the recovery.

“We stand ready to act quickly and assist businesses experiencing a cash flow crisis.”