Startups…the funding dilemma

There are lots of ways to get funding in Australia. However choosing the best type will depend on what you’re doing and how much you need.

For an aspiring startup, the initial funding is the hardest money for entrepreneurs to get: That very first cash from the investors bold enough to take a chance and get their brand-new business rolling, often while it’s still little more than an idea.

So what are the alternatives?

For any new venture or startup business, the latest kids on the block are ‘seed’ or ‘crowd funding’.

Generally ‘seed’ funding offers investors equity in the new startup, whereas ‘crowd funding’ is more reward based (non equity).

The tax implications for both seed and crowd funding differ depending on the type of crowd or seed funding used. There may also be GST implications, also depending on the type and nature of the arrangement.

In the last week, the Government has announced that it will introduce a tax incentive for startup investors which will provide concessional tax treatment for investments made in qualifying innovative startup companies with high growth potential…so watch this space.

Kim Jay CA – Director