A 620% uptick: Equity crowdfunding in Australia gathers momentum

Bubble Tea Club

Bubble Tea Club co-founders Jenny Le and Pam Yip. Source: supplied.

More Australian businesses are raising more money through equity crowdfunding, with investments in the last quarter up a massive 620% compared to the same time last year.

According to a report from crowd-sourced funding (CSF) platform Birchal, funds raised through such campaigns were up 100% for the 2020-21 financial year, compared to the previous 12 months, as crowdfunding becomes a “go-to funding source” for both small businesses and startups.

Over the financial year, 63 successful offers were closed across the major platforms — a 40% increase on the previous financial year.

On average, campaigns secured more capital, with the total invested reaching $47 million, 100% more than in the previous 12 months.

Birchal led the way, hosting 45 successful deals — 71% of the total — and accounting for 70% of all funds raised.

However, OnMarket accounted for $7 million in funding, hosting six successful deals. These included Cannatrek’s $2.5 million raise, the third biggest of the year.

Equitise also saw $7 million raised, but through 10 deals. Its most successful campaign was for Batch Brewing, which raised $1.5 million.

Birchal team

The Birchal team. Source: supplied.

Quarter-by-quarter

In the September quarter, things started to pick up following a COVID-19 dip. A total of 14 deals were successful, marking an 8% increase on the same period 12 months earlier.

However, the amount of money invested was up by 30% on the previous year, reaching $9.23 million, and some 6,192 people invested — an increase of 49%.

This pattern continued into the December quarter, with 22 deals completed (a 10% increase), $13.44 million raised (a 36% increase) and 6,558 investors backing campaigns (a 31% increase).

In the March quarter, the number of successful deals was down by 20%, with just five campaigns closed, and the number of investors was similarly down 18%, with 2,222 people investing.

However, the dollar-figure of funds raised was still up by a considerable 43% — reaching $5.76 million — suggesting those who did invest were willing to part with the big bucks.

Much of this was driven by ‘CFO-in-your-pocket’ fintech Thrive, which closed the biggest CSF deal of the year in February, raising $3 million through its Birchal campaign in just three days.

Thrive founders

Thrive co-founders Ben Winford (centre) and Michael Nuciforo (right), with chief technology officer Warren More. Source: supplied.

It was in the June quarter, however, that things really went wild in this space, even taking into account the COVID-19 disruption of the same quarter in 2020.

This year, 22 successful deals were closed, totalling $18.72 million in investment from 10,034 backers. Compared to the same quarter in 2020, that’s an increase of 260%, 620% and 424%, respectively.

The three months included successful campaigns from Unhedged, which raised $2.3 million, Bubble Tea Club, which raised $1.65 million, Seabin Project, which raised $1.2 million, and Coinstash, which raised $2.8 million.

The new “go-to”

According to Birchal co-founder and managing director Matt Vitale, the massive uptick at the end of the financial year shows continuing demand for this kind of capital.

Equity crowdfunding “democratises the investment process,” he said in a statement, “enabling businesses to raise investment online from their most passionate customers and fans”.

The COVID-19 pandemic has seen more people getting behind local businesses, and investing offers another way for them to do so.

And, as the effects of the pandemic continue across the country, Vitale doesn’t see the trend slowing. Birchal has seen 10 successful campaigns close in July 2021 already, he notes, and he’s confident this financial year will see continued growth in the sector.

“The industry is proving to be a resilient and reliable funding source for small businesses and startups, and a great way for retail investors to get exposure to a new and exciting asset class,” he said.

“It’s the go-to funding source for Australian early-stage businesses now.”

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