ASIC has granted licenses to seven platforms to allow fundraising from the general public in exchange for equity. ASIC has given licenses to Billfolda, Equitise, Big Start, Birchal Financial Services, OnMarket Bookbuilds, Global Funding Partners, and IQX Investment Services, with more to follow.
The regime is currently restricted to small public companies that have less than $25 million in assets. Legislation is pending to extend the rules to industry groups and private companies, including fintech companies in Australia.
Eligible public companies can source up to $5 million each year through crowdfunding, and retail investors can invest between $50 to $10,000 per issuing company each year.
Kelly O’Dwyer, minister for revenue and financial services, said that the regime will allow Australian entrepreneurs to obtain what they need to turn their ideas into commercial successes. The new source of funding will create opportunities for small businesses in their early stages.
Millennials will be the main demographic likely to invest and adopt equity crowdfunding in Australia, with over half of all 18-19-year-olds having aspirations to own their own business, according to NAB Group Economics Report.
Crowdfunding will help small companies to grow, but the regime’s success will rely heavily on industry participation.
Crowdfunding was introduced to Australia with Kickstarter in 2009, Pozible in 2010, and Indiegogo in 2008, which allowed businesses to offer rewards rather than equity. The Federal Government introduced the Crowd-sourced Funding Act in September 2017, which removed regulatory barriers to businesses accessing public equity crowding.