Australia's first equity crowd funding platform set for launch

According to The Australian Financial Review, the platform - known as VentureCrowd - will differ from the likes of Kickstarter and Indiegogo, VentureCrowd by offering investors the opportunity to buy actual equity stakes in start-up businesses online.

Pre-screened start-ups will be allowed to pitch and secure funding via the online VentureCrowd platform. They will be vetted by an array of partners - already signed on with VentureCrowd - representing Australia's early stage ecosystem.

These partners include Blue Chilli, StartMate, Blackbird Ventures, the University of Melbourne, SydVentures, Tank Stream Labs, Vivant, TechBeach, Fishburners, iAccelerate, the University of Wollongong, the Slingshot Accelerator, AngelCube and Future Capital.

"VentureCrowd will democratize the early stage finance sector in Australia in a way that has never been done before," said Jeremy Colless, managing partner at Artesian.

The minimum investment will be about A$1,000 ($902) per start-up but Colless adds that investors will be encouraged to develop a diversified portfolio.

The launch comes as the Australian government's Corporations and Markets Advisory Committee is looking to revise laws governing equity raising with a view to making them compatible with crowdfunding. Currently, capital raising outside public markets is limited to A$2 million or 20 investors in any given 12-month period, with exemptions for sophisticated or wholesale investors.

"Australia currently punches well below its weight in terms of risk capital as a percentage of GDP assigned to the start-up space in comparison to world leading centres such as Israel and the US," added Colless. "I think it's likely a proportion of this risk capital will be re-allocated to technology investment, especially if there are further high exposure exits and IPOs in the technology space."

This concept of crowd funding has been pushed to the fore in the US by the Jumpstart Our Business Startups (JOBS) Act, a piece of legislation intended to encourage the funding of small business in the US by easing various securities regulations.

Among the provisions of the Act is Title III, which creates an exemption under the securities law allowing equity stakes to be sold through a crowd funding structure.

The Securities and Exchange Commission (SEC) voted unanimously to approve the bill last month, issuing a proposed set of rules. A company can raise a maximum of $1 million through crowd funding offerings in a 12-month period. Investors, meanwhile, are permitted to invest up to $2,000 or 5% percent of their annual income or net worth, whichever is greater. If their net worth or annual income exceeds $100,000 they can in invest up to 10% with a cap of $10,000 in a 12-month period.

 

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• Topics
• Australasia
• Early-stage
• Venture
• Australia