The R&D Tax Incentive (R&DTI) is one of Australia’s most generous innovation funding mechanisms. For any startup company focused on building something new, whether a product or service, it can be the difference between stretching your runway or stalling out too soon. But while the rebate is designed to support growth, startup mistakes around timing, eligibility, and planning can lead to lost capital or avoidable stress.
At Rocking Horse, we work with high-growth teams across industries and see the same issues crop up again and again. Here are five common mistakes and how R&D Finance can help startup companies turn the R&DTI into a reliable source of capital.
1. Treating the rebate like a “future bonus”
Yes, the R&DTI delivers a cash rebate, but only after your financial year closes, your tax return is lodged, and the Australian government processes your claim. That timeline can stretch out for months. Meanwhile, your team still needs to be paid, your product still needs shipping, and your marketing can’t go on hold.
Waiting for the rebate often creates a funding gap, particularly in high-burn phases like hiring, product development, or market research. R&D Finance offers a way around this. By accessing funds against eligible R&D spend already incurred, you can deploy that cash into your business now, when it can make the biggest impact. Whether it’s bridging payroll, investing in customer acquisition, or extending your runway to a key milestone, early access to your rebate gives you room to breathe and room to grow.
Expanding your access to capital while your R&D is still in motion can also create greater flexibility across departments. For instance, you may have new marketing initiatives or sales programs that need to launch alongside product development. Early access means you’re not stuck in sequential planning; you can move in parallel and maintain speed across the whole business.
2. Guessing what counts as eligible R&D
The ATO’s definition of eligible R&D isn’t just “we built something cool.” It hinges on specific criteria: was there technical uncertainty? Was a systematic approach taken? Did it generate new knowledge? Many founders, especially in SaaS, AI, medtech, and hardware, get caught out by over- or under-claiming because they’re unclear on what actually qualifies as core R&D activities.
This is where having an experienced R&D tax advisor matters. They help structure your claim around the criteria and keep your records aligned with ATO expectations. If you’re already documenting activities and expenses as you go, that same evidence helps you secure finance earlier and more smoothly. It’s important to note that at Rocking Horse, while we don’t assess eligibility ourselves, we only fund against verified R&D spend as per a comfort letter from an R&D tax advisor.
It’s also worth noting that assumptions in your business plans can sometimes lead to overclaiming. Having a clear understanding of what counts ensures your funding strategy is grounded and your claim stays compliant.
It’s also important to note that ineligible claims, intentional or not, can delay funding or trigger unwanted audits. Startups operating in emerging sectors often find the boundaries of eligibility less intuitive, which is why record-keeping, structured project descriptions, and advisor support can be just as important as the technical work itself.
3. Leaving funding decisions too late
It’s common for startups to delay looking at capital options until their hand is forced, usually by a tighter-than-expected runway or an unforeseen delay in revenue or funding. At that point, you’re not in a position to negotiate; you’re in a position to react.
The better approach is proactive. If you’ve already spent on eligible R&D this financial year, even if your claim isn’t lodged yet, you may be able to finance against it. That’s capital sitting on your balance sheet that you can convert into cash now, long before your refund is paid. By planning ahead, you can fund the next phase of development, cover key hires, or extend your burn rate on your terms, not the tax calendar’s.
We’ve worked with companies that used R&D Finance to bridge to Series A, keep a core tech team in place, or avoid a hasty down round. Timing matters, and early planning pays off.
In practice, early funding decisions can also unlock options that aren’t on the table when you’re in a cash-flow crisis. You can negotiate vendor contracts more confidently, retain strategic hires, and keep focus on execution instead of fundraising. All of this contributes to healthier operations and a stronger case for your next raise.
4. Assuming R&D Finance is hard to access
Many founders assume that anything tax-related will be slow, jargon-heavy, and administrative-intensive. But R&D Finance isn’t a traditional bank loan. It’s built for high-growth, innovative businesses that already qualify for the rebate, and it’s based on what you’ve already done, not what you hope to do.
At Rocking Horse, the process is clean and quick. You don’t need forecasts or pitch decks. We don’t require personal guarantees. If you’ve got eligible spend, and a comfort letter from an R&D tax advisor, we can typically move from application to funding in a matter of weeks. Our team works directly with your advisor or accountant to keep things smooth, so you can stay focused on building, not chasing red tape.
We also understand that team members are already juggling product deadlines, operations, and investor updates. The last thing a startup company needs is another slow process. That’s why we focus on speed, transparency, and founder-friendly terms.
That speed matters, especially when you’re in the middle of product development or market expansion. The ability to unlock capital within days, rather than waiting months, can help you meet launch timelines, fulfil critical orders, or close partner deals faster. For early-stage companies, those marginal gains can turn into major competitive advantages.
5. Using equity to cover refundable R&D costs
This one stings, especially in hindsight. Too many early-stage businesses raise equity capital to fund operations, including eligible R&D, only to later receive a rebate on those same activities. That means you gave up ownership to fund costs that the government would have helped cover.
The alternative is smarter: fund eligible R&D with non-dilutive, short-term capital via R&D Finance. That way, you preserve your cap table, keep more upside for your team and investors, and avoid giving away equity to plug cash flow holes.
It’s a more efficient use of capital, and investors increasingly expect this level of sophistication in how startups manage their funding stack. Using R&D Finance signals that you’re thinking strategically about capital, not just raising reactively. It also keeps your focus on building a long-term growth engine, rather than constantly fundraising to cover short-term gaps.
This is especially relevant in today’s funding environment, where valuations are under pressure and dilution is more expensive. Avoiding a poorly timed equity round, even once, can have lasting effects on your ownership, control, and investor confidence.
Funding smarter, growing faster
The R&D Tax Incentive is a brilliant resource for innovative Australian businesses, but only if you use it well. By avoiding these five startup mistakes and by planning your funding strategy early, you can transform a once-a-year rebate into a consistent source of growth capital.
R&D Finance helps make that possible. It complements the R&DTI, not replaces it, by giving you access to cash already earned through innovation. That’s capital you can use now to fund momentum, not wait for in the future.
Whether you’re building a new product or service, running market research to validate your next move, or investing in team members who’ll take your startup company to the next level, accessing your rebate early can be a game-changer.
Curious what you could unlock? Apply now or chat with our team about how R&D Finance can fit into your funding roadmap.