Airport transfer comparison site Jayride has become the first Australian startup to see the exit of early equity crowdfunding investors, who can now choose to sell their shares for a healthy return.
The startup, founded in 2012, was crowdfunded through VentureCrowd, a platform allowing investors to back startups through a VentureCrowd Trust. In three raises, with shares priced at $0.24, Jayride secured a total of about $665,000 in investment.
Jayride listed on the ASX in January, after an over-subscribed initial public offering the month before. The listing share price of $0.50 allowed existing shareholders to exit their investment for returns of 108%, if they wished.
Since then, the company’s share price has fluctuated, reaching a high of $0.56 and a low of $0.30. At the time of publishing, it was at $0.45, meaning shareholders selling now would see returns of 87.5%.
VentureCrowd chief executive Sunny Yu told StartupSmart that, of 19 crowdfunding investors, who contributed an average of approximately $35,000 each to Jayride, about half have sold their shares since the IPO, making this the first time equity crowdfunding investors have exited a startup in Australia.
Jayride co-founder Rod Bishop tells StartupSmart: “If shareholders want to take liquidity, that’s excellent.”
Bishop sees crowdfunding as a “really interesting” way to engage with new investors, while also paving the way for success at a later date.
In total, Jayride raised around $15 million in funding, with less than $700,000 of that coming from crowdfunding. And Bishop says he believes the company would have got to the point of IPO regardless. Crowdfunding is “not the be-all and end-all”, he says.
However, he says crowdfunding platforms can “create the opportunity for investors who otherwise wouldn’t be able to invest a large enough parcel”.
“They’re able to provide proper engagement to support those parcel sizes on your behalf … [the investors] get more confidence in the transaction,” he says
Another benefit of going down the crowdfunding route is simply to boost shareholder numbers, ahead of an IPO.
Bishop says: “To list on the ASX you have to have hundreds of shareholders.”
Equity crowdfunding “gave us a more distributed shareholder base going in to the IPO.”
For startups that see a public listing in their future, Bishop is quick to recommend equity crowdfunding as “continuous with a path to an IPO”.
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“If you’re looking to consider an IPO at a future date, equity crowdfunding is an interesting bridge that should be considered,” he says.
However, being the first startup to see investors exiting successfully is not really a big deal, in Bishop’s eyes.
“When we started in 2012, a lot of what we now call the startup ecosystem in Australia didn’t exist. In many ways we’re used to being the first,” he says.
“We’re on the forefront of the change to digital space,” he adds.
“We’re really familiar with cutting new turf”.