Most Australian founders spend time raising equity. Far fewer think about credit.
Credit is an established component of the technology funding market across the US and Europe.
Record US venture debt volume in 2025
of US venture-backed exits were venture debt backed
of total US venture-backed exit value came from venture debt backed companies
That does not mean credit is right for every company. It means that founders of established, revenue-generating businesses increasingly consider credit alongside equity – not simply as emergency runway, but as a deliberate capital-structuring decision.
Here in Australia, it’s far less familiar.
As a result, it’s often misunderstood. Some founders assume it’s only relevant for profitable businesses or only becomes relevant when equity is no longer available.
Neither is true.
Growth credit can sit alongside equity funding, helping founders fund specific growth initiatives at different stages of a company’s journey.
The question is not credit or equity. It is which form of capital creates the most value at that juncture.
Where growth credit creates value
Credit is commonly used to provide the company more time to get to its next inflexion point. This may be profitability, a new equity funding round or an exit event. Raising today may be sub optimal if a new product is not mature enough, feature set unproven, market traction not quite there or market timing is not right.
Credit can provide timing flexibility which is even more important in today’s market where equity investors are highly selective.
1Runway extension is one of the most common use cases we see today, particularly among software and AI companies.
Truescope used growth credit to allow it to continue investing in growth while preserving shareholders’ ownership.
Using credit to manage working capital swings is also highly valuable. A business may be winning customers and signing contracts but face a timing mismatch between investing in delivery or deployment and receiving customer receipts.
This is particularly relevant for businesses combining hardware and software, where manufacturing, inventory or contract delivery may need to be funded before revenue is received.
XY Sense used growth credit to fund investment in components for its hardware device required to fulfil customer contracts as demand for its workplace analytics platform grew. This aligned the funding with the expenditure while preserving equity for longer-term investment opportunities.
Funding inorganic growth through credit is another common use case.
Acquiring customers, product or distribution capability is typically a defined, one-off use of capital with a measurable link between the investment and payback, making credit a natural fit for the expenditure.
InDebted used growth credit multiple times to support its acquisition strategy through a facility that could be drawn as opportunities arose. This gave the business flexibility to move on acquisitions as they emerged and to align the funding with its broader growth strategy.
Choosing the right capital
Growth credit isn’t designed to replace equity. It’s designed to solve different problems.
The starting point is understanding what you’re trying to solve for and where you need to invest, then choosing the form of capital that best supports that objective. For some growth initiatives, that will be equity. For others, credit may be a better fit. And in many cases, the right funding
