Investment crowdfunding, or crowd-sourced funding (CSF) as it is called down under, generated $72 million in online capital formation, according to an industry report.
The information is compiled by Birchal, the largest online investment platform in Australia. Birchals has been providing this report for several years now.
While a smaller market, Australia continues to grow. In aggregate, since 2018, issuers have raised $219 million for approximately 250 SMEs.
Other data points include:
- Average deal size – $733,000
- Average individual investment – $1695
- 70 securities offerings were over $1 million
- Total market estimated market cap of firms completing a securities offering at $1.4 billion
- There have been 50 follow-on securities offerings
- The largest securities offering to date was for ZeroCo for $5 million (October 2021)
- The fastest funding round was for Your Mates Brewing in October 2022 at under two hours
- Birchal reports the bulk of online capital formation for early-stage ventures at 192 offerings raising $144 million
Industry sectors that have been the most popular issuers include:
- Food and Beverage at 39%
- Financial Services at 12%
- Sustainability at 11%
In 2022, most issuers were “growth stage” (49%) with greater than $1 million in reported revenue. Pre-revenue startups accounted for 16.5% of the funding activity. The number of pre-revenue firms raising capital declined from 2021, while revenue-generating firms raising capital increased dramatically.
The total number of investors that backed issuers during 2022 was 35,643 – down 5% versus the year prior.
Industry activity was certainly impacted by the ongoing challenges of COVID in 2022, but still, the industry saw an increase over year prior.
Birchal states that securities crowdfunding has emerged as an important part of Australia’s startup ecosystem – especially during a period of a challenging economic environment. Similar to other jurisdictions, valuations have declined, with pre-money valuations hitting 16.5X of revenue in 2021, while in 2022 that multiple was almost cut in half to 8.7X revenue.
According to the report, ASIC (Australian Securities and Investment Commission) believes the capital raising regime is “operating efficiently” and is a “robust alternative for smaller companies to raise up to $5 million in 12 months with appropriate investor protections.”
The report states that the industry continues to mature, and issuers continue to raise higher amounts of capital.
Birchal co-founder and CEO Matt Vitale comments on the industry:
“So, from Birchal’s perspective, 2023 is our time to shine. Australia’s startup ecosystem has made tremendous progress over the last few years, and we are determined to help ensure we do not lose a vintage (or two) of great Australian startups. Given the moderation in valuations, we have observed this year, we are hopeful that the forward-thinking investors backing early-stage Australian businesses in 2023 will be very pleased with their performance in the years to come.”
Birchal accounts for more than 70% of Australia’s investment funding volume. Birchal is one of the first seven intermediaries to receive a license from ASIC in 2018.
Other active platforms include:
- Equitise – 14 offerings raising $12.3 million (also active in New Zealand)
- OnMarket – 5 offerings raising $5.5 million
- Others accounted for nine deals and $4.6 million
The report is available here.