Raising capital is a critical challenge for startups and high-growth businesses in Australia. While equity funding from venture capital (VC) firms remains a popular option, the high cost of equity capital and dilution of ownership have led founders to explore alternative financing solutions. Venture debt has emerged as a flexible, non-dilutive funding tool that complements equity without sacrificing founder control.
For Australian startups looking to scale efficiently, venture debt in Australia offers a strategic middle ground between traditional bank loans and VC funding. At Rixon Capital, we specialise in providing venture debt solutions tailored to the needs of high-growth businesses. Our focus is on asset-backed, senior-secured loans that enable founders to fund expansion, smooth working capital, or bridge to profitability without giving up equity.
What is Venture Debt?
Venture debt is a type of loan facility typically extended to early-stage companies and scaleups that have raised or are in the process of raising equity capital. Unlike traditional bank loans, venture debt is structured to support growth-stage companies that may not yet be profitable but have strong revenue traction, investor backing, or valuable assets.
Key characteristics of venture debt include:
- Non-dilutive: Founders retain their equity and control.
- Secured lending: Loans are typically backed by tangible assets, recurring revenue streams, or a combination of both.
- Fixed repayment: Capital is repaid through interest and principal over a pre-agreed term.
Common use cases include:
- Extending the cash runway between funding rounds
- Financing equipment or technology upgrades
- Supporting sales and marketing expansion
- Bridging to profitability or acquisition
By complementing equity funding, venture debt can significantly improve a company’s capital efficiency.
Why Australian Startups Are Turning to Venture Debt
In Australia’s maturing startup ecosystem, founders are becoming increasingly discerning about how and when they raise capital. Venture debt offers an appealing path forward for several reasons:
- Funding Gaps in Series A/B Stages: While early-stage seed capital is relatively accessible, later-stage funding can be more challenging. Venture debt fills this void by providing fast, reliable liquidity to proven businesses.
- Retention of Equity and Control: Many founders are reluctant to part with additional ownership, especially once a viable business model is in place. Venture debt enables continued growth without the trade-offs of dilution.
- Speed and Flexibility: Compared to lengthy VC due diligence, venture debt can be secured within weeks. It also offers more tailored repayment terms.
- Cost-Effectiveness: Though interest-bearing, the cost of capital for venture debt is materially cheaper than the cost of equity.
- Strategic Complement to Equity: Rather than replacing venture capital, venture debt can be used to enhance follow-on rounds by reducing equity needs and giving founders more levers to pull as they scale.
Benefits of Venture Debt for High-Growth Companies
For Australian startups with momentum, venture debt presents numerous advantages:
- Preserves Founder Equity: Avoids the dilution that comes with equity rounds, maintaining ownership and future exit value.
- Quick Access to Capital: With fewer approval layers than traditional funding paths, venture debt offers timely access, ideal for seizing growth opportunities.
- Flexible Use of Funds: Funds can be used across a wide range of growth activities, including customer acquisition, M&A, or working capital.
- Custom Structuring: Loans are tailored to match the company’s revenue cycle, asset base, and strategic milestones.
- Enhances Investor Confidence: Shows financial discipline and broadens a company’s capital stack, signalling strength to existing and prospective investors.
How Rixon Capital Delivers Venture Debt
Rixon Capital is a leading provider of venture debt in Australia, offering asset-backed, senior-secured lending to fast-growing businesses. Our team has deep experience in both private credit and institutional M&A, having deployed over $500 million in secured SME loans and executed more than $10 billion in public and private market transactions.
Key features of our lending approach:
- Loan Sizes: Typically ranging from $2 million to $20 million
- Security: Backed by tangible assets or contracted and/or recurring revenue streams
- Sectors: Experience across technology, SaaS, and B2B services
- Approach: We partner with founders to structure debt that aligns with their commercial objectives, not just balance sheets
Is Your Startup Ready for Venture Debt?
The ideal borrower for venture debt through Rixon Capital typically exhibits:
- Consistent Revenue Traction
- Clear Growth Strategy and Use of Funds
- Asset or Cashflow Security
- Strong Management Team and Governance
Institutional backing is beneficial but not always required. What matters most is the strength of the business fundamentals and the clarity of its next growth phase.
How to Engage with Rixon Capital
Our engagement process is designed to be transparent, efficient, and founder-friendly:
- Initial Discovery Call: To understand your business, growth plans, and funding needs
- Eligibility Review: Preliminary assessment of fit and structure
- Deal Structuring and Proposal: Tailored terms aligned with your cash flow and security position.
- Approval and Funding: From the first conversation to funding, typically within 4–6 weeks
At every stage, our team prioritises alignment with your long-term objectives, ensuring our capital is an enabler, not a constraint.
As the cost of equity rises and startup funding becomes more selective, venture debt in Australia offers a compelling alternative for scaling companies. It allows founders to retain ownership, move quickly, and unlock growth without compromising control.
At Rixon Capital, we bring institutional rigour and commercial pragmatism to every lending partnership. With a deep track record in SME lending and venture financing, we are committed to supporting Australia’s next generation of high-growth businesses without dilution.
If you are a founder seeking smart, non-dilutive capital to scale your business, contact Rixon Capital to talk to us.
