The founders of crowdfunding platform Pozible have taken their first step into the world of equity crowdfunding with the launch of the Birchal platform on Tuesday night, and they have an ambitious goal of creating “the next Australian consumer-based unicorn”.
The soft-launch of the platform occurred this week, ahead of Pozible formally applying for licensing from the Australian Securities and Investments Commission’s (ASIC) later this year, ready for when the government’s Crowdsourced Equity Funding legislation comes into effect in September.
Speaking to StartupSmart, Birchal co-founder and Pozible chief executive Alan Crabbe says the company isn’t worried about locking down licensing from ASIC once the legislation kicks in, saying Pozible has been involved in discussions with the government for years.
“We’ve always been involved in the discussions around the equity crowdfunding legislation, and we spoke specifically to the people making the recommendations,” Crabbe says.
“There’s always going to be a risk, but we’ve got an experienced team so there won’t be any complications around the licensing aspect of it.”
The company is using the next couple of months to help the platform’s launch partners get established and build up interest. These partners include gin producer Four Pillars, craft brewery Black Hops, and mattress retailer Sleeping Duck.
These three businesses come under the category of “scale-ups”, says Crabbe, or companies that are well established with a well-built brand, looking to expand and scale with the help of investment from customers.
However, Crabbe notes there’s “no stage too early” for equity crowdfunding, and Birchal is already receiving expressions of interest from companies wanting to use the platform to get started.
“In the future, we’ll see experienced founders use the platform at the business’ inception stage to get off the ground,” he says.
One company looking to scale-up by using Birchal is Black Hops Brewery, with co-founder Dan Norris telling attendees at the platform’s launch he believed there was a “real thirst” for equity crowdfunding platforms in Australia.
“We raised a small amount of money from a couple of friends and launched our own brewery a year ago, but we’re learning every step of the way requires more money,” Norris said.
Unable to wait until September for the legislation to come into effect, Norris and his co-founders decided to raise money themselves in order to expand the business, putting together an “equity crowdfunding style” prospectus.
“Within two days we had 230 people read the document, and we had so many offers I had to shut it off. In six days we had $1.3 million in offers for investment, and we only wanted $400,000,” he said.
“The interest was really incredible. I had set it up so anyone who couldn’t invest 50k couldn’t be part of it, but they still filled the form in and still told me they wanted to be part of it anyway. I know there’s a real thirst for [equity crowdfunding].”
With a number of businesses waiting in the wings to get on board, Crabbe is bullish about the future of the platform and crowdfunding more generally, hoping to have $100 million of equity raised per year through equity crowdfunding by 2020.
For successful crowdfunded businesses, there are some concerns investors might push for an exit or acquisition so to see a return on their share investment, but Crabbe believes that won’t be an issue. Instead, Birchal is hoping to encourage businesses on the platform to reward users in other ways, such as exclusive access to products.
“Generally we’ll see some investors there for an exit or an acquisition, but we hope more will be on board to be involved with the company over its lifetime,” he says.
“We’d like to encourage businesses to reward investors in other ways. We see this platform operating in an equity and rewards-based hybrid model.”