Startup Analysis

As Xinja scores record-breaking $2.6 million, let’s look at the biggest equity crowdfunding raises so far

Stephanie Palmer-Derrien /

Xinja

Xinja founder and chief Eric Wilson. Source: Supplied.

Back in 2017, challenger bank Xinja was the first startup to take advantage of Australia’s shiny new equity crowdfunding laws.

Now, it’s breaking records again, raising almost $2.6 million in the biggest equity crowdfunding round yet.

Equity crowdfunding legislation was passed in Australia in May 2017, and Xinja became the first Aussie startup to raise using the new method, securing $500,000 within the first 18 hours, and closing with a total of $2.4 million.

Before that, however, taxi operators app ingogo raised a whopping $6.7 million using VentureCrowd in 2015.

While this would technically take the crown, it was before the new laws came into effect.

VentureCrowd executive director Steven Maarbani tells StartupSmart this was a wholesale raise, rather than a retail campaign, and was allowed under the rules at the time.

Later, Jayride became the first Australian startup to give equity crowdfunding investors a return, when it listed on the ASX.

In three VentureCrowd raises, Jayride raised a total of $664,000. When it listed in an oversubscribed IPO, early shareholders were able to exit for 108% returns.

Maarbani says digitisation in the investment sector is growing “and will continue to grow”.

In the UK, for example, almost 25% of all venture capital investment is done online, he says.

“We believe that trend will continue in Australia and that equity crowdfunding will become mainstream for both investors and companies seeking to raise capital. It will become an integral part of the capital stack for capital raising in the future,” Maarbani says.

Jonny Wilkinson, founder of equity crowdfunding platform Equitise, says deals are gradually getting bigger as Australians are starting to better understand and accept equity crowdfunding as a funding method.

“People are starting to get more comfortable,” he says.

Equitise has also seen individuals getting more confident and investing in multiple deals, he says.

In Wilkinson’s opinion, Xinja in particular piques investor interest because the neobank has “a really good level of understanding and activity”, and is very tuned in with its customer already.

“They tapped really well into their customers,” Wilkinson says.

Xinja has engaged with them from the beginning and kept them involved in the process, ultimately offering them the chance to own a part of it.

“They’re doing something people really resonate with and are passionate about, and they have done that in a very effective way.”

So, putting ingogo’s 2015 raise aside, these are the biggest equity crowdfunding deals completed since the new laws came into effect.

1. Xinja, $2.6 million

In its second equity crowdfunding campaign, neobank Xinja has raised $2.6 million from 1,500 investors, 200 of whom are repeat investors.

The startup smashed its $500,000 minimum subscription within just nine hours of going live (in the first round, this took 18 hours).

Speaking to StartupSmart when this campaign launched in January, Xinja founder Eric Wilson said there are some 7,500 Xinja cards in the market now, being used in 15 countries each day.

About 23,000 people are signed up to the neobank’s platform.

Having customers on board as shareholders adds a certain level of pressure, “but in a good way”, Wilson said.

“Because a lot of [customers] are investors and they’re so passionate about it, they will pick up the phone and tell us if they love something or if they hate something,” he explained.

“It’s a super competitive advantage for us.”

2. Xinja, $2.4 million

Xinja became the first Australian startup to launch an equity crowdfunding campaign after the legislation allowed it in 2017.

The neobank surpassed the $500,000 minimum within 18 hours, and went on to raise a total of $2.44 million.

Speaking to StartupSmart after the launch of the campaign, Wilson said the initial response “has completely blown me away”.

While it hoped to become Australia’s first functioning neobank, Xinja has found itself up against the likes of Up, 86 400 and Volt, each of whom are also scooping a share of a market dissatisfied with traditional banks.

However, speaking to StartupSmart earlier this year, Wilson said there are more to come.

“I would be very surprised if we got through 2019 without another couple coming on,” he said.

3, DC Power Co, $2.2 million

Solar energy retailing startup DC Power Co became the world’s most popular crowdfunding campaign ever, by number of investors, with 17,500 backers on board, contributing to a $2.18 million raise.

The Melbourne-based startup raised through OnMarket in April last year. At the time, founder Emma Jenkin suggested the key to getting people on board is to offer a low minimum investment.

DC Power Co’s minimum investment was just $50, and according to Jenkin, two-thirds of investors went for that option. And, while having that many shareholders may seem daunting, Jenkin wasn’t phased.

“These people are going to be our customers, so we’ll need to be communicating with them anyway as part of our day-to-day business,” she said.

4. West Winds Gin, $930,000

After a successful campaign on Equitise, Margaret River-based distillery West Winds Gin secured $932,000 in funding: 186% of its target.

The company had 100 individual investors within 72 hours, and reached its minimum target of $500,000 within a week. By the end of the campaign, the distillery had 293 investors on board.

At the time, West Winds chief Paul White told SmartCompany a booze business was a perfect candidate for equity crowdfunding, because everyone wants to own a piece of the brand.

“We were getting queries from people all the time, asking, ‘how do we invest?’,” he said.

“The appeal of [equity crowdfunding] is that it’s a great way to broaden the base of people on the journey with us.”

5. PT Blink, $815,000

Construction tech business PT Blink raised $815,000 from 468 investors in August last year, in order to expand operations internationally.

The technology allows multi-storey buildings to be built using steel columns and trays, which are manufactured off-site, allowing for fast assembly later. According to PT Blink, the technology can reduce construction time by up to 50%.

“Equity crowdfunding has allowed us to capture the attention of the community and be able to educate them on the latest construction technology,” PT Blink founder Murray Ellen said at the time of the campaign.

“The beauty of equity crowdfunding is that it not only provides our business with the necessary capital, but it also means that our investors will become endorsers and advocates for PT Blink and the PT Blink technology,” he added.

NOW READ: What’s the deal with equity crowdfunding, and should I do it?

NOW READ: Women’s ride-sharing startup Shebah embarks on $3 million equity crowdfunding campaign, after male VCs failed to get on board

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Stephanie Palmer-Derrien

Stephanie Palmer-Derrien is the editor at StartupSmart. You can contact her at [email protected].

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