The Australian Securities and Investment Commission (ASIC) announced yesterday it had approved the licensing of the first seven “crowd-sourced funding” platforms. Due to a recent change in Australia’s security regulations, these investment crowdfunding platforms may allow businesses to raise up to $5 million – all online. Retail investors may invest up to $10,000 per issuing company per year.
Equity crowdfunding is complementary to the Australian Government’s focus on Fintech innovation – a sector of industry that has been deemed strategically important for the economy.
Kelly O’Dwyer, MP, Australian Minister for Revenue and Financial Services, welcomed ASIC’s “groundbreaking” issuance of licenses that will help small companies to raise funds following commencement of the Government’s equity crowdfunding framework in September.
“This framework, which was a landmark reform of the Turnbull Government, has removed regulatory barriers enabling Australian entrepreneurs to obtain the capital they need to turn good ideas into commercial successes. It will help Australia be a country of new innovative businesses, which is good for jobs and good for consumers. This new source of funding creates opportunities, especially for small businesses in the early growth stage. This is all about delivering more jobs, higher wages and greater growth for our economy by ensuring Australians are able to harness new and innovative ways of developing and growing businesses.”
The first round of platforms includes the following companies:
- Big Start
- Birchal Financial Services
- Global Funding Partners
- IQX Investment Services
- On-Market Bookbuilds
O’Dwyer said the Australian Government will build on the equity crowdfunding framework, with legislation to extend rules to proprietary companies currently before the Parliament. The vast majority of Australian companies fall under this category.
Equitise, a crowdfunding platform that has been waiting for years to provide services to Australian businesses, was the first site to list a securities offer.
Xinja, a 100% digital bank or ‘Neobank’ seeks to challenge traditional banks similar to the UK challenger bank ecosystem. Their first product, a pre-paid card and app, in the coming weeks. Xinia hopes to raise up to A$3 million in the crowdfunding round. Any Australian over the age of 18 may invest from as little as A$250. The offer is also available for wholesale investors in New Zealand. The capital raised from the crowdfunding offer will go towards developing Xinja’s core banking system.
Commenting on the announcement that investment crowdfunding was finally live in Australia, Equitise co-founder Chris Gilbert said that before now, early stage investment through crowd-sourced funding was only available for high net worth investors or venture capitalists.
“This groundbreaking change means Australians can now put their money behind what could become the next Atlassian or Canva and support early stage local companies raising up to $5 million,” said Gilbert. “We have led the charge to change this legislation for the past three and a half years to give all Australian investors the opportunity to invest in early stage companies.”