What investor strike? Equity crowdfunding enjoys strong start to 2016 despite controversial reforms

Australian investors are continuing to fund deserving local startups despite increasing concerns about a so-called “investor strike”, VentureCrowd general manager Luke Fay says.

Both the federal opposition and several members of the startup community have voiced concerns about investors closing their wallets until the startup tax incentives included in the innovation statement come into effect in July.

But in the meantime equity crowdfunding is booming.

VentureCrowd, Australia’s first equity crowdfunding platform, has successfully closed a campaign worth more than $600,000 for education tech startup Zookal and has just launched another for e-sports social network GAMURS.

The oversubscribed Zookal funding round marked the 14th deal completed through VentureCrowd since 2014 and Fay says concerns about the innovation statement changes haven’t deterred investors on the platform.

“Our view is that good startups get funded, whether or not you get a tax break for doing it,” Fay tells StartupSmart.

“Investors that we’re seeing at the moment will continue to invest in quality startups.

“We’ll potentially grow that pool of investors by providing tax incentives but that’s not stopping good companies getting funding.”

Sydney-based startup GAMURS has already raised $300,000 from new and existing investors and is aiming to raise a further $100,000 through the VentureCrowd platform.

GAMURS founder Riad Chikhani says the equity crowdfunding avenue gives access to a diverse range of investors.

“VentureCrowd gives us access to a lot of high net worth individuals that will add value and expertise to our business outside of the e-sports industry,” Chikhani says.

The campaign is underway and the startup will soon be meeting with prospective investors.

“Investors can come in and listen to the story and meet the entrepreneurs,” Fay says.

“Then we’ll go from there – they’re taking investments already and there are around 20 days left in the campaign.”

Fay says the high amount of interest in equity crowdfunding in 2016 proves the viability of the funding route, despite the controversial legislation proposed by the government and currently before parliament.

The bill opens up equity crowdfunding to all types of investors, but startups will have to become unlisted public companies in order to complete the process.

Fays says the legislation is far from perfect.

“Obviously we think it’s a disadvantage for startups, having to run a big register of equity holders is somewhat problematic,” he says.

“There’s significant room for improvement.”

Whether Labor’s amendments to the reforms are passed or not, Fay says VentureCrowd has a very promising lineup of startups looking to list on the platform.

“We have a healthy pipeline building,” he says.

“Once the companies complete our process and the market timing is good we’ll release them.”

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