Home' Forge : Vol 2 No 2 Contents crowdfunding gives investors
access to companies they would
never have access to otherwise,
'Our investors are SMSF investors,
people who are high-income earners
-- but we're not talking zillionaires,'
'They're generally people in PAYG
professional jobs who are interested
in diversifcation of their portfolios.
It’s diffcult to get access to these
things unless you know somebody,
and that shouldn't be the way it is.
'Technology has enabled more
people to get involved in that we
can put up an offer of a company
that's looking to raise money,
and anybody who's registered
on our platform can get access to
documents and do as much due
diligence or as little as they want,
and invest or not.'
Australia's equity crowdfunding
industry has seen impressive
growth in its short life. KPMG's
'Harnessing Potential: The
Asia-Pacifc Alternative Finance
Benchmarking Report' reveals that
the industry was responsible for
raising $5.5 million and $8.2 million
in the early years of 2013 and 2104
respectively -- but by 2015, the
equity raised soared to $26 million.
Legislation formally legalised
equity crowdfunding in the United
States in 2012, but early platform
EquityNet began operating in 2005.
In the United Kingdom, it offcially
started in 2011, led by major
platforms Crowdcube and Seedrs.
Asia's equity crowdfunding
scene has quickly gathered
momentum, too, with Malaysian
and Thai authorities passing
equity crowdfunding laws last year.
On fgures alone, the industry has
experienced massive growth. In
2013, the global crowdfunding
industry raised $6.1 billion. It
skyrocketed to $16.2 billion in 2014
and soared to $34.4 billion in 2015,
according to crowdfunding research
Currently, equity crowdfunding in
Australia is restricted to wholesale
investors -- those who earn at least
$250,000 per annum, or who have
$2.5 million in assets. Opening the
market to retail investors would
match legislation already in place
in New Zealand, and delight equity
crowdfunding operators. But it has
In its submission to the federal
government's Financial System
Inquiry last year, the Australian
Securities and Investments
Commission expressed fears that
'mum and dad' investors would be
exposed to fraud risks and potential
losses stemming from the failure of
But these doubts can be addressed
by capping the amount that
platforms can raise from the
crowd, and the investments
made by the crowd, according
to measures highlighted in
a Corporations and Markets
Advisory Committee report to the
federal government in 2014.
In a raft of proposals, the committee
canvassed caps for crowd investors
of $2500 per issuer, and $10,000 for
all issuers in any 12-month period.
It also suggested that investors
sign risk disclosure statements
and have access to cooling-off and
Failing to allow retail investors
into equity crowdfunding presents
a danger to innovation within
Australia's economy, says Equitise
co-founder Will Mahon-Heap.
'From an Australian perspective,
we've been slightly frustrated with
the slow progress of the legislation
-- particularly because New Zealand
provided such a workable and
easily copyable framework,' he says.
'It is frustrating that we can't do
a full retail offer to Australia yet.
People make an assumption that
because you're a retail investor
you're not capable of making the
same investment decisions as those
of signifcant wealth.
'That's a misconception, and an
antiquated view of the general
public. When you think about it,
there are quite a lot of people out
there capable of making these
investment decisions, and they
aren't able to do so if they don't
meet the asset qualifcation test.’
Without changing legislation
around equity crowdfunding, the
Turnbull Government risks losing
talented start-ups to overseas
investors, Mahon-Heap warns.
'The really unfortunate thing is
you see really good Australian
companies raising money offshore
through equity crowdfunding,'
'There are platforms -- even us, being
a trans-Tasman platform -- which
have raised capital into Australian
companies. I'm able to count them
on one hand at the moment, but we
will progressively do that.
'There are global platforms in the
States and the United Kingdom
that would be able to do this for
Australian companies, as well, so
there's a danger that Australian
companies would seek to raise
FEATURE // 43
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