Sep 20, 2021

Share Fintech companies, alcohol brands, and innovative food products fare best at raising money online to boost their businesses, according to a new report on Australia’s equity crowdfunding industry. According to crowdfunding platform Equitise’s first Equitise Industry Report 2021, the total amount raised in Australia across all crowdfunding platforms for the financial year ending in 2021 increased 125 per cent on the previous financial year to $46 million. The heavy hitters included fintech companies such as values-based financial advice service Lumiant and AI-powered banking, accounting and lending platform for small and medium businesses, Thrive, which raised $1.16 million and $3 million respectively. Supplied Meanwhile, Perth-based hot sauce brand Bunsters took home $2 million from superfans to help diversify its product line; and Marrickville based craft brewery Batch Brewing raised $1.5 million in two days from customers and other backers to open up new venues. Equity crowdfunding lets people put money behind start-ups and more mature private companies. Unlike platforms such as Kickstarter or Pozible, backers receive shares in the company in return for stumping up cash. Advertisement So far, no local companies to raise funds this way have had a successful exit, meaning financial return on investment data are limited and speculative. However, Equitise co-founder Jonny Wilkinson said Kiwi companies TradeWindow, a software platform, and Greenfern Industries, which is in the therapeutic cannabis game, are planning to go public this year. The report found that through Equitise, the average amount raised per offer was $669,634, on Birchal it was $612, 619 and via OnMarket it was $782,274. The average number of investors per successful offer across the three platforms was 382. Although equity crowdfunding provides founders with an alternative to business loans, angel investors, and venture capital, platforms such as Equitise take on fewer than 5 per cent of the hundreds of companies that reach out to them each year wanting to have a crack on the platform. Mr Wilkinson said for a business to even consider equity crowdfunding, it’s crucial to have an existing network, be that social media fans, passionate customers, or a strong professional contact list likely to financially back the venture in question. Of that 5 per cent, only 70.6 per cent are then actually successful in raising the minimum amount posted with their offering. Platforms such as Equitise spend time with founders to work out an appropriate minimum and maximum offer to ensure that raises makes sense for the time and effort they take to prepare and the goals of the business. Advertisement “The whole reason we started the business was to make early stage capital markets more efficient, and that’s happening,” Mr Wilkinson said. “In Australia, this is now three years old, and becoming more established, the market is growing quickly, and we’re really starting to be able to do that cohort analysis.” Equitise charges businesses an upfront fee to post an offer and then takes 6 per cent of the raise if successful. The growth of the nascent equity crowdfunding industry since 2018 was triggered by changes to the Corporations Act that allowed proprietary limited companies to have an unlimited number of investors rather than the previously capped number of 50 non-employees. Legislative changes also allowed crowdsourced funding offers to be advertised on any medium, making a raise on LinkedIn, Facebook, Instagram and other social media fair game. Mr Wilkinson said businesses with strong existing network and easy to understand products, such as the breweries Batch and Spinifex, usually spend very little on spruiking their raises, but the average business stumps up at least $10,000 to $20,000 in marketing costs to help target would-be investors. Natasha Gillezeau is a journalist for The Australian Financial Review based in the Sydney office. Connect with Natasha on Twitter . Email Natasha at natasha.gillezeau@afr.com.au Save