The Australian Business Growth Fund (ABGF) commissioned the 'Powering the Growth Economy' report, which sheds light on this pressing issue. The study involved interviews with over 3,500 SMEs and analysis of data from the Australian Taxation Office (ATO) and the Australian Bureau of Statistics (ABS). It highlights that while 35% of Growth Economy businesses have sought external equity funding in the past three years, more than half were unsuccessful in securing the necessary capital.

This mismatch between demand and supply is stark. Only 2% of private equity and a mere 0.4% of venture capital are directed towards growth capital for SMEs. This lack of accessible equity funding leaves many businesses unable to capitalise on opportunities or scale at the rate they could, effectively keeping them in a state of stagnation.

Addressing this $38 billion equity gap is not merely about injecting capital; it's about unlocking the full potential of these businesses. With adequate equity funding, SMEs could achieve 24.5% higher revenue growth and significantly contribute to sovereign capabilities in key sectors like manufacturing and renewable energy. Closing this gap would lay the groundwork for sustainable, long-term economic growth in Australia.

For small business owners, this report underscores the importance of exploring diverse funding avenues and advocating for policies that facilitate easier access to equity financing. By doing so, SMEs can better position themselves to seize growth opportunities and contribute more robustly to the Australian economy.