Ready your wallets: regulator grants Australia’s first crowdfunding licences
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Australia’s new equity crowd-funding regime is underway after the corporate regulator granted the first seven intermediary crowdfunding licences this week.
Australian Financial Services licences issued by the corporate regulator will allow for the seven to act as intermediaries to provide crowd-sourced funding services, where investors receive equity in return for their early support.
The seven crowdfunding pioneers are:
The corporate watchdog say the crowd-sourced funding regime will provide start-ups and small to medium sized companies with a new means to access capital.
OnMarket’s Tim Eisenhauer said the new system opened a new avenue for retail investors to take part in early funding of new businesses with investments as little as $50.
“Retail investors have been long been locked out of IPOs or placements off-market which have always been the domain of private equity or venture capitalists,” Mr Eisenhauer told Stockhead.
“Now for the first time, everyday retail investors are given access to Australian businesses of the future.”
The new system has been a long time coming.
The first equity crowdfunding platforms came out of the woodwork in 2012, with the UK leading the charge followed by the US and New Zealand.
Australia’s regime was introduced under the Corporations Act in September, with prospective companies chomping at the bit to get underway.
Another licensee Birchal has already opened three expressions of interest campaigns for consumer brands such as SAMPLE Brew or Oscar Razor, with more to come in the new year.
“This historic move opens up a new economy of people power allowing businesses to raise capital in a brand-new way,” they announced on Thursday.
Equity crowdfunding allows eligible public companies to raise up to $5 million, with retail investors able to invest up to $10,000 per company per year.
Figures from Macquarie Bank show Australian entrepreneurs want to borrow as much as $60 million above what they are allowed, illustrating a real need for capital that crowdfunding is looking to satisfy.
Crowdfunding for private companies is also in the works, still under debate in Parliament.