Estate Baron, an Australian real estate crowdfunding platform, now has no limit on the number of investors that can participate, which has allowed the company to bring the minimum investment down to $2,000.
Founder Moresh Kokane explains this means Estate Baron has made one of the first true retail property crowdfunding offers possible. He writes that last year, the company did two projects under a wholesale Australian Financial Services License (AFSL).
While those offers helped us test the concept, we were limited to 20 investors only under current regulation in Australia. Since then we have been hard at work, instead of waiting for deregulation we put in the grunt work and have secured a Retail AFSL and a full PDS [Product Disclosure Statement] for our upcoming offers.
In a LinkedIn Pulse post, Kokane clarified what is necessary for a full retail crowdfunding offer in Australia:
1) You need a Retail Australian Financial Services License
If you are in the business of promoting offers then you need a financial services license. This is whether or not you are promoting to wholesale or retail investors. If you are only restricting yourself to wholesale investors the burden of compliance is lower and such Australian Financial Services Licenses (AFSL) are easier to obtain.
But if your offer is being made to Retail investors then you are held to a higher benchmark and ASIC goes out of its way to ensure investors are protected. So you need what is called as a Retail AFSL.
2) A Registered Managed Investment Scheme (MIS)
The MIS you setup to structure the investment needs to be Registered with ASIC if you are going to take more than 20 investors. ASIC reviews it and then assuming everything is ok you get your signoff. This process can take months or even years. And it is extremely crucial that you get this right. Any changes to the structure again need to be reviewed and signed off by ASIC.
Estate Baron also has a new offering, Mount Waverley Townhouse Development, with funds being raised to construct two architecturally designed townhouses in Mount Waverley, Victoria. Kokane notes that this offer is special because it is one of the first offers of its kind in Australia and is open to everyone, not just big investors. It allows the platform to take on more than 20 investors, as it is a Registered Retail MIS under a full retail AFSL. The total required is $500,000, and as of this writing $250,000 has been raised, with 75 investors interested.
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