New York Fund increases its stake in R&D Lender Radium Capital

Image:  Steve Ferrier, courtesy of the West Australian

Techboard's Partner Radium Capital is pleased to announce it has secured further financial backing to step-up its offering of quarterly R&D advances.

Specialist research and development funder Radium Capital is poised for new period of rapid growth after an affiliate of New York-based hedge fund Brevet Capital bought a 50% stake in the Perth based company.

In the 15 months since Radium Capital was launched by long-term friends David Weir and David Brennan, it has supported more than $130 million of Australian research and development expenditure and is aiming for $300 million in the next 12 months.

The young Perth fintech entrepreneurs, mates since primary school, saw an opportunity to solve the cashflow problems of companies conducting R&D which have to wait up to 18 months to access the Federal Government’s innovation rebate through their tax returns. Radium Capital provides quarterly advances on what companies expect to receive back, allowing that money to be poured back into the companies, creating jobs and spurring economic growth.

Brevet Capital’s Innovation Structured Finance Co., LLC made available an initial US$100 million to fund advances and took a small shareholding to back the fledgling company and has since been impressed with both the initial growth and the future opportunity.

“We have been very impressed with the progress Radium Capital has made and we are pleased to continue our support by increasing our equity position,” Brevet Capital’s Eric Hubey said. “We see ourselves as partners rather than only investors, and we look forward to working jointly on strategic
direction and growth initiatives.”

Radium CEO and co-founder David Weir said the equity investment by Brevet ensure guaranteed funding for the business and the loan book.

“The strategy to provide sustainable non-dilutive capital to Australian businesses remains unchanged,” he said. “We will continue to provide businesses early access to the R&D refund on a quarterly basis which will enable them to grow their businesses and drive Australian innovation and job creation.”

“With locked in funding we will continue to provide approvals for advances up to $2 million in 48 hours. Companies can have confidence that if they have eligible R&D expenditure Radium Capital can form part of their overall funding mix and provide sustainable capital through the year.”

“One of the most important issues for our customers, and the accountants that refer them to us, is knowing that they have certainty of funding. Our criteria are very straightforward so the accountants and their clients know that if they meet our criteria they will definitely get an advance. Having that source of funding now as a partner in the business cements that certainty for our customers.”

While the terms of the transaction are confidential, Mr Weir said Brevet would have board representation, but there would be no anticipated management changes.

There are currently about 15,000 companies claiming a total of over $2.5 billion a year through the Federal Government’s R&D Tax Incentive, which refunds 43.5 cents of every dollar spent under R&D programs registered with the Australian government.

Currently companies will incur R&D expenditure during a tax year and then apply for a refund as part of their tax return, which means it can take up to 18 months from spending the money before receiving the refund. Radium Capital can provide an advance on money spent in the previous three months which can then be reinvested into R&D, having an enormous impact on cash flow and overall working capital requirements.

This exciting announcement was also featured in the West Australian Newspaper and Business News


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