Australia’s equity crowdfunding sector got a shot in the arm in September 2018, when new laws passed through the Senate that extended crowd-sourced funding (CSF) laws to proprietary companies.
Fast forward to November 2019, and there’s been a steady flow of activity since then in the sector’s first full year of operation.
A total of 56 deals have been successfully closed under the local CSF regime, with those companies tapping the crowd for a combined sum of just under $40m.
Within that sector overview, three companies accounted for around 75 per cent of deal flow. The busiest platform in the industry was Birchal, which put together and closed 25 deals (45 per cent). Equitise ran second with 14 deals (25 per cent), followed by OnMarket with eight (14 per cent).
Speaking with Stockhead, Birchal co-founder Matt Vitale said the platform had gained traction in the sector by establishing clear parameters around its operating model that both companies and investors could understand.
“The way we run campaigns is with an expression of interest (EOI) period to start with. We’ll open an offer but it will only be available to private investors for a period of time to get that early support in,” he said.
“We typically like a funding round to reach 50 per cent of its minimum target before we open to the public crowd, and then we promote it to the close of the round.”
Vitale said that like any nascent sector, there’s an aspect of learning with experience and improving over time, but the team had already settled on a standardised process for the key aspects of a raise.
“It helps us in positioning a company’s value proposition, and it makes it a bit easier to know what advice we can give people as well — what to expect, where they need to improve and what a successful raise actually looks like,” he said.
“We find having a process and repeating the process is working for us.”
Among the more high-profile of Birchal’s 25 deals was Shebah, the women’s only ride-sharing platform, which raised a record $3m and is now returning to the crowd for a follow-up round.
Vitale said the platform was staying busy into the end of the year, with eight offers currently live on the Birchal site. But as part of the company’s operating process, not all of those have yet been made available to public retail investors.
He added that the number of companies who had approached Birchal for capital-raising purposes had been “increasing and is starting to accelerate”.
“The real goal is finding a relevant audience for an offer, and then showing the opportunity to that audience in an efficient and cost effective way,” he said.
“Each one is different because the way this has traditionally been done is by cultivating a list of potential investors.
“But the reality is it’s hard to predict how a list is going to engage, particularly for early stage businesses. We’re focused on the company and finding the right audience for that company.
“We work with businesses that have a strong consumer proposition, and also put a lot of faith in the crowd being able to figure out which are the better opportunities. That’s why we run this EOI process, and the ones that have engagement will proceed.”