Birchal Plans Secondary Market for Crowdfunded Securities

Investment crowdfunding platform Birchal will launch secondary trading of CSF securities in 2020, according to a note from the company.

Birchal is a leading “crowd-sourced funding (CSF)” platform in Australia. The new marketplace, announced today, will be called Birchal Trade.

There has been a good amount of discussion on providing a liquidity path, besides a merger or IPO, for crowdfunded securities. A good number of platforms have reviewed options to pursue a marketplace for secondary transactions. Perhaps the most successful within the sector is Seedrs in the UK. Their secondary market started slowly but has continued to scale along with the platform.

Birchal explains that prior to now, people were unable to sell their shares after investing. Securities issuer Shebah Rideshare is expected to be the first CSF company to use the Birchal Trade service, with the companies planning to pilot Shebah’s secondary market in early 2020, pending approval by the Australian Securities and Investment Commission (ASIC).

Shebah, a ridesharing service only for women, raised A$3 million on Birchal earlier this year with 94% of investors being women. Shebah currently claims the title as the most money raised for the young securities crowdfunding sector.

Birchal states that in response to demand, as well as better than expected performance by the company, Shebah recently launched a second offering which is currently live on Birchal. Shebah is currently seeking a minimum of A$500,000 on Birchal at a pre-money valuation of A$25.14 million

“We have been overwhelmed by [the] support for both of our crowdfunding campaigns, but a common question for investors has been ‘how can I sell my shares’?” said George McEncroe, Shebah founder and CEO. “With strong demand for our shares, we’re hopeful that Birchal Trade can provide an additional avenue for people to invest in Shebah and provide some liquidity to existing shareholders at the same time. So we’re excited to be working with the Birchal team to pilot this innovative solution for Shebah’s CSF shareholders.”

Birchal states that it has applied to ASIC for relief to operate a low volume market, which will allow up to 100 transactions and $1.5m in aggregate value within a 12 month period without the need for a full exchange license, similar to the ASX.

Matt VitaleMatt Vitale, co-founder of Birchal, says that low volume markets have historically been used by community banks and other entities to offer shares to interested buyers and sellers – minus a full market license.

“We think using the existing legislative framework is the best first step towards providing a more comprehensive secondary market solution as the CSF industry matures in the future,” Vitale said.

Birchal says it has been working on the technical and commercial model for the Birchal Trade service in recent months. The decision has been made to pilot the service with Shebah.

“Liquidity for CSF shareholders has been a persistent concern since the regime began. We’re thrilled to be partnering with Shebah to pioneer a solution to this issue,” added Vitale.


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