The platform is targeting up to $2m in new funding, with cornerstone backing from a network of sophisticated investors.

Equity Crowdfunding (CSF) platform Birchal has established itself as the market-leader in Australia’s fast-growing CSF industry.

Now, it’s doing what it does best; giving investors simple access to invest in a high-growth company with scale-up ambitions — but with a twist.

This time, the latest CSF raise announcement on the platform is for Birchal itself, as the company looks to consolidate its platform in what’s now a major new sector in Australian capital markets.

Birchal will look to raise up to $2m in the CSF round, with cornerstone backing from a network of sophisticated investors including serial entrepreneur Dom Pym, who also co-founded the neobank UP.

Step on the gas

With Birchal now taking expressions on interest on the platform, Stockhead caught up with Birchal Managing Director Matt Vitale to discuss the rationale for the raise and the company’s outlook.

He highlighted that after 3+ years of strong growth, the business is already profitable and generating free cash-flow.

But strategically, the additional cash injection gives Birchal an opportunity to consolidate its business model as a core platform in Australia’s crowd funding industry.

“We hosted 59 successful deals on our platform last year, so we expect that growth trend to continue. And it means we can become a very significant business over the next couple of years,” Vitale said.

“So the time really is now for us to accelerate into that opportunity.”
Since the establishment of Australia’s crowd funding sector in 2018, the industry has grown at around 70% annually, Vitale said.

It’s now on its way to matching the UK sector, where crowd funding accounts for around 15% of broader venture capital activity.

“Australia is still in its ramp-up stage, but based on the UK experience, it could be a material industry with a market size of around $500m by 2024,” Vitale said.

“But what we have the opportunity to do now is firmly establish crowd funding as a mainstream asset class. And when we think about what an asset class needs, it really exists on four key pillars.”

The four pillars

To consolidate its platform, Birchal is looking to build out its platform to achieve the following four objectives;

  1. A primary capital market for companies to raise growth capital;
  2. A secondary market that provides effective liquidity for investors to buy/sell;
  3. Strong governance and detailed information for initial stakeholder engagement;
  4. Infrastructure to tie it all together, ensuring effective compliance and reducing friction in payment and transactions.

For Vitale, the primary capital component is where Birchal has established itself as the leader in the Australian market.

“I’d argue the primary markets piece is probably the hardest piece of the puzzle to solve – things like building an investor audience and pricing equity,” Vitale said.

“It’s really hard and where we have an advantage is that we’ve been able to systemise it and repeat that success.”

“But for the industry to grow and be sustainable, we really need to build out an ecosystem of products and services to make crowd funding a viable and credible way for people to invest, build wealth and repeat the process – recycling that capital and investing in other opportunities,” he said.

“So we spend a lot of time thinking about what the industry needs. What we’ve built is a really great origination machine, and now the market is demanding us to build these additional services.”

“It’s actually a great place to be, and a great opportunity, and we’re going to deploy these funds to take advantage of it.”

Taking the long view

More broadly, Vitale said the build-out of Birchal’s service offering forms a key step in how crowd funding can play a key step in the future of Australia’s entrepreneurial economy.

“I think in the early days, people thought crowd funding was primarily used by B2C companies offering products or services direct to consumers, but our experience is far broader than that,” he said.

“What it’s really driving and enabling is the growth of the entrepreneur economy, and a lot of people are really passionate about how that can contribute to Australia’s future.”

He added that crowd funding also gives investors an effective way to allocate capital that’s aligned with modern standards around ethical investing.

“We’ve got 130,000 users on our platform, who for the first time now have a simple and effective way to find startups that they’re interested in investing in,” Vitale said.

“So without getting too romantic about it, the growth of our platform is a real opportunity to change the economy and change the world from the bottom up.”

This article was developed in collaboration with Birchal, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.