With two equity crowdfunding platforms launching last week, the start-up community is keen for the government to announce the findings of its review into the regulatory hurdles around this new way of raising money.
The review launched in September 2013 with a discussion paper and calls for written submissions. It is being coordinated by federal agency Corporations and Markets Advisory Committee (CAMAC).
A CAMAC spokesperson told StartupSmart it had received over 40 submissions.
“The status of the review is that the committee is working on it. There is no deadline but they’re working very hard regardless,” the spokesperson said.
Once the submissions have been reviewed, CAMAC will deliver a report to the government.
“The next steps will be up to the government when they make their recommendations.”
Jeremy Colless, Artesian Ventures partner and managing director of crowdsourced equity platform VentureCrowd (which launched last week), told StartupSmart he was optimistic the government would create a good environment for this emerging fundraising approach.
“They probably will loosen some of the regulations, but the timing might not be short. It’s a big issue, one they need to consider carefully. Getting the balance right between protecting investors and facilitating investment is key,” Colless says.
The major change the VentureCrowd team would like to see is lowering the financial barriers for investors.
“We think there is room for development to bring us more in line with the United States, where you need $100,000 in income and $1 million in assets. Here it’s $250,000 in income and $2.5 million in assets,” Colless says.
Crowdfunding equity platform OurCrowd also launched in Australia last week.
Paul Niederer, chief executive of the Australian Small Scale Offerings Board (ASSOB), a fundraising platform for unlisted Australian companies, told StartupSmart there were two key changes the government needed to make to reach the full potential of crowdsourced equity funding.
“The thing that restricts the businesses that list on ASSOB at the moment is you can only have 20 retail or mum and dad investors. We’re hoping they lift this to 100 or even more,” Niederer says.
Lifting the maximum investors means start-ups will be able to seek smaller amounts from investors, opening up a whole swathe of new investors.
Niederer says the average transaction on ASSOB is $30,000 compared to $5000 on the ASX.
“It’s a bit ironic that for a small scale offering people have to raise a whole lot more from individuals. If you need half a million for your next step, that’s $25,000 per person which is a fair bit,” Niederer says.
He adds the government also needs to lift the restriction that bans companies from advertising their funding rounds.
“If you look at equity crowdfunding platforms from around the world, the front page of the site shows you the name of the company and maybe the amount they’re seeking. But it’s illegal in Australia to publicly advertise the fact that a company is seeking money unless it’s issuing a prospectus,” Niederer says.
Communications Minister Malcolm Turnbull says on his blog CAMAC is scheduled to report to the government in April.
“We will be looking to encourage businesses, particularly start-ups, to use crowdsourced equity funding to pursue innovation and growth while ensuring that appropriate protections are in place for investors,” he says.
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