Birchal, the leading investment crowdfunding platform (crowd-sourced funding) in Australia has published its half year report reviewing industry activity. According to the platform, investment crowdfunding is displaying “sustained stability” and growth in platform activity.
Birchal shares in its Crowd-Sourced Funding (CSF) FY24 Industry Report ‘Funded’ there has been a 16% increase in the number of companies using equity crowdfunding in Australia compared to FY23. Birchal notes that this is during a challenging economic period.
In regard to funding, volumes are said to be consistent with FY23, delivering $64.5 million from 35,000 investments.
Birchal was responsible for hosting 66 of the 99 campaigns and raising $46.5 million from 27,000 investors. Birchal’s next closest competitor saw $8.2 million in funding volume during the same period.
While there were more issuers in the past year, the average funding round declined to $661,000. In contrast to the VC market, there were fewer rounds but larger funding.
Birchal states that successful issuers outpaced new listings on the Australian Stock Exchange (ASX) where there were 56 initial public offerings during FY24.
Matt Vitale, co-founder and CEO of Birchal, said the past year demonstrates “remarkable resilience with equity crowdfunding levels remaining consistent with 2023.”
“Despite the challenging funding environment, a 16% increase in the number of companies using CSF compared to FY23 highlights the growing recognition of CSF as an efficient way to raise capital.”
Vitale said that startups and SMEs play a key role in driving economic growth and they are the lifeblood of the Australian economic future.
“Proposed changes to the wholesale and sophisticated investor tests may narrow the pool of investors able to invest in startups, impacting both investors and the availability of capital for startups and SMEs. Persistently high inflation, interest rates, and cost-of-living pressures complicate the economic landscape,” said Vitale. “The CSF regime appears to be a critical part of the answer. It is the only way early stage businesses can make a regulated public offer of securities, and gain unparalleled access to a potential investor pool of over 10 million Australians.“
Vital reported that approximately 130,000 individuals have participated in online securities offerings while other capital pools narrowed. Vitale described online capital formation as a “proven, regulated, scalable mechanism.”
“We believe equity crowdfunding is an incredibly powerful piece of regulatory infrastructure with robust investor protections. Enhancing incentives for retail investors by expanding ESIC incentives to all CSF companies is essential for the future of CSF. It unlocks a national pool of capital.”
Birchal investor Dom Pym, co-Founder of Up, Pin Payments and his family office Euphemia, said he is thrilled about the future of online capital formation in Australia with over $211 million for the industry.
“I champion and invest in businesses like Birchal that elevate the startup ecosystem, positioning us as global leaders. The data from Birchal’s latest industry report underscores the power of CSF in providing vital capital to innovative startups that might otherwise be inaccessible to investors.”
Pym said the returns experienced in European markets where platforms like Crowdcube and Seedrs have been active for more than a decade highlights the effectiveness of online capital formation.
“I’m excited to see what Birchal will deliver for the Australian economy as our funding market matures in the coming years.”
Other points of interest from the report:
- In FY23 46% of all successful CSF offers were made by companies that had greater than $1M in reported revenue, an increase of 8%. Interestingly, 28% of CSF deals were follow on raises in FY24.
- Quarterly performance saw Q1 and Q2 were strong compared to FY23 with a greater than 20% increase in funding volume for the first half, however, those gains have been eroded by a softer finish in Q3 and Q4.
- The industry as a whole delivered $315 million to the ecosystem across 427 CSF offers through the CSF regime since it commenced in 2018.
- Birchal facilitated over $211 million of investment into the ecosystem for startups and SMEs across 279 successful offers from over 127k investments.
- Food and Beverage was the top performing category for the third consecutive year with $19.7 million raised across 29 deals, representing 30% of the funding volume, down on FY23 when it made up 37%.
- Healthcare was second at $14.2 million (again predominantly medicinal cannabis-related business)
- Sustainability is a continuing as a trend in CSF with $8.1 million raised across 14 offers (12%)
- Manufacturing made it to the top 4 categories for the first time.
Top funding rounds:
- Hellyer’s Road – $4.4 million from 1,338 investors (OnMarket)
- Medigrowth – $3.5 million from 2,047 investors (Birchal)
- Naked Life Spirits – $3 million from 935 investors (Birchal)
- Hydrowood Holdings $2.4 million from 668 investors (OnMarket)
- Birchal – $2.4 million from over 1,149 investors in December 2023, (Birchal): Having previously raised $3million in 2022 via its own crowd-sourced Funding (CSF) platform, Birchal with approximately $5.39 million raised across two offers, is now among one of the biggest achievers through the CSF regime.
The complete report is available here.
