Fintech Australia Welcomes Approval of Crowdfunding Legislation

Fintech Australia lauded the Australian Parliament’s vote to support the Corporations Amendment (Crowd-Sourced Funding) Bill of 2016. The advocacy group said the approval of the equity crowdfunding law will provide a major avenue for companies to raise capital and create new jobs.

Fintech Australia CEO Danielle Szetho described the new legislation as a significant advancement to provide funding for young companies;

“This new legislation represents an important step to open up early-stage capital markets. It also represents a substantial step forward in making the Australian regulatory environment internationally competitive, given concerns that Australia is falling behind the rest of the world when it comes to equity crowdfunding (ECF). Our members can confirm that there is strong pent-up demand from Australia’s investment community to utilise the provisions in this legislation. Also, some of the companies interested in taking advantage of equity crowdfunding are family run enterprises, so this doesn’t just benefit the startup community, it’s about everyday mum-and-dad SMEs as well.”

Szetho added that she hoped the Australian government would extend equity crowdfunding from unlisted public companies to private companies as well – a limitation within the existing legislation.

“The passing of this legislation will assist the government, industry and companies to better understand the dynamics of the ECF market in Australia, while preparing broader legislative change for private companies.”

Jonny Wilkinson, co-founder of Equitise and Fintech Australia member, said he was aware of more than 20 companies that had been awaiting the passage of this legislation so they could use it to raise funds.

“Traditionally, Australia has had an under-developed venture capital market which has led to companies having an over-reliance upon the Australian Stock Exchange (ASX) to access capital, or relocating their companies overseas. There is a significant cost to listing on the ASX, in both time and money, with recent changes to minimum listing requirements on the ASX making it even more difficult for early stage high growth businesses to list. [Equity crowdfunding] is essential to help filling the gap left as an essential tool in early stage capital markets.”

Wilkinson said he was also aware of a handful of companies that have converted to unlisted public companies just to be able to take advantage of the new rules. He believes there are many more companies that will convert in anticipation of the legislation passing.

CrowfundUp founder Jack Quigley, also a Fintech Australia member, commented as well;

“The importance of legislation to support equity crowdfunding was something identified as important by Fintech Australia in its formative period in late 2015. Unfortunately, it’s been a 15-month marathon to get this legislation across the line but nevertheless we are excited that it is now in place. Like Equitise, CrowdfundUP has been approached by a large number of companies looking to utilise ECF when the legislation is passed.”