Australian start-ups seeking funding will soon have a potential new source of capital as a Hong Kong-based angel investment firm prepares to launch a start-up “stock exchange”.
The exchange, called Bigcolors, is preparing to go live with beta testing on July 1.
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Bigcolors director Jackie Lam, who’s also a director of Excitin, the firm behind Bigcolors, told StartupSmart the exchange aims to raise awareness of start-up communities among Asia Pacific investors, who were generally conservative and preferred to put their money into property or shares.
“The more start-ups listed, the more visible it [the start-up community] gets,” she says.
Bigcolors wants to help Australian start-ups get funding without the need to head overseas, Lam says.
She says start-ups can apply to be listed on the exchange by submitting a shortened business plan that sets out where the start-up wants to be in six to 12 months, as well as details about the founders, background and how much money they want to raise. A start-up can list for free on Bigcolors and is charged a 5% funding fee if they successfully reach their funding goal.
She says Bigcolors sees start-ups being able to raise up to US$100,000 from investors through the exchange, which should equate to a stake of around 10-20% in the start-up.
It’s expected shares would generally start at US$1-a-share and then trade on the exchange, rising or falling depending on investor sentiment. Investors are charged 2.5% of the successful trades. Start-ups would also have the option of buying back their shares.
Lam says Bigcolors already has 42 start-ups lined up to use the platform, including Hong Kong collectible-maker Spacepet and US online speed-dating site Kiss Hugs.
The plan comes on the heels of another start-up exchange aimed at solving capital issues which went live earlier this month (June) based in Willemstad in the Caribbean.