Crowdfunding hits $1 billion mark in 2021, continues COVID-19 boom
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Crowdsourced funding (CSF) hit the $1 billion mark for the first time in 2021 as it continued to be one of the booming asset classes throughout the COVID-19 pandemic era, according to Birchal.
The platform behind 75% of Australia’s CSF activity this week released its CSF Yearbook 2021 showing it was the biggest year yet for the industry, which posted a 140% increase on 2020.
There were 89 successful CSF offers completed, raising $71 million, representing a 140% increase on 2020. More than 37,000 investors were part of the 2021 CSF party.
Birchal co-founder and managing director Matt Vitale said the CSF sector was growing at a compound annual growth rate (CAGR) of 70% since 2018, when federal legislation passed extending crowdsourced funding (CSF) to proprietary companies.
“Despite the obvious challenges we all faced during 2021, there were so many milestones achieved during the year that it really should be one to remember and not forget,” Vitale said.
“The total value of CSF companies broke $1b in 2021 and as the industry matures we’re seeing more companies come back for second and third follow-on CSF offers, 20 so far, with an average uplift in value of 114%.”
He said microbiome health company Biome Australia (ASX:BIO), which completed a successful CSF offer in 2019, became the first CSF-funded company to list on the ASX in November 2021.
Vitale said it was now a significant moment for CSF in Australia, and consistent with their observations of the UK equity crowdfunding industry at a similar stage in its development.
“We’ve also observed a marked increase in professional investor participation in CSF offers, busting a widely-held myth in Australia that raising through CSF might make a company uninvestable for professional investors down the track,” Vitale said.
“The most notable example being Square Peg’s $6m investment in Zero Co, alongside their record-breaking $5m CSF offer in October 2021.”
It seems Australians love a good beer both to drink and invest in with the craft beer sector among the most popular CSF investments. The food and beverage industry received the highest proportion of investment with 21 campaigns raising $16.4 million.
But within that it was craft beer affiliated businesses which represented the majority of funds raised with eight campaigns raking in a total of $9.25 million.
The craft beer sector is kicking off 2022 well with Gold Coast brewer Black Hops raising $2.2 million via CSF with Birchal, the largest raise of its type in Australian beer industry history.
Financial services was the second most invested industry in 2021 with nine successful campaigns, raising a total of $12.59 million.
It was followed by sustainability and software, which raised a total of $8.97 million and $8.07 million respectively.
Some records were set in 2021 with cleaning products company ZeroCo raising $5 million in less than 7 hours in October, the largest and fastest CSF to date.
ZeroCo hit the $3 million milestone in just 47 minutes, beating fintech Thrive’s previous record of three days.
Activity in the Australian CSF industry continued to consolidate in 2021 towards the major players Birchal, Equitise and OnMarket.