Unlocking equity crowdfunding in Australia

Equity crowdfunding has been a popular method to raise capital in many countries for the last few years.

           

 

Equity crowdfunding enables a large group of individuals (‘the crowd’) to invest in private businesses.  The legislation authorising this is Crowd-sourced Funding Act of 29 September 2017.

The legislation means retail investors can now crowd fund companies by investing $50 to $10,000 each year per business.  Previously, only angel investors or venture capital firms had access to these sorts of investment opportunities.

Equity crowdfunding legislation allows un-listed public companies to raise as much as $5 million over a 12-month period.

A company approaches an equity crowdfunding platform to raise funds.  The platform performs due diligence on the company and ensures it complies with a range of obligations put forward by Australian Securities & Investments Commission.

If a company does not raise the minimum target, then the offer is cancelled, and the funds are returned to investors.

While investing in early-stage businesses is high risk, there can be high rewards.  

 

 

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