Australian equity crowdfunding platform Birchal has today announced it will use its very own technology to raise up to $2 million in funds to scale its ecosystem, which has facilitated $100 million to date in funding for Australian SMEs and startups.
The equity crowdfunding campaign on its own platform is a first of its kind for any crowd sourced funding (CSF) platform in Australia, and will see the company welcome Australian retail investors who can buy shares in Birchal.
Prolific startup investor and neobank Up co-founder Dom Pym is one of the main investment backers of the raise, which Birchal co-founder Matt Vitale hopes will secure $2 million in funds.
Managing director Vitale told Business News Australia the decision to raise capital comes at a time when Birchal is in a strong financial position, noting it is profitable and is generating cash.
“We’ve got lots of plans. Raising this capital will help us to accelerate the progression of those plans,” said Vitale, who co-founded Birchal alongside Alan Crabbe.
“An ecosystem of products and services will be needed to build out this industry. Our current service is that primary capital piece, and it’s a very efficient and compelling solution.
“Thinking about it as an asset class, there’s really four pillars: primary capital, secondary trading, stakeholder engagement and infrastructure. That will shape the things that we will be building over the next few years.”
Vitale hopes the funds will let Melbourne-based Birchal build out those four pillars, which will make it easier for retail investors to exit their positions, and remove the binary win/lose outcomes that are so ingrained in the narrative of startups and SMEs today.
“Improving the flow of information, accountability, how frequently companies are updating investors; these are all things that the market will demand of us,” Vitale said.
“It’s exciting to have the opportunity to raise capital so we can move faster than these plans.”
The raise comes after Birchal hit the milestone of having raised $100 million for SMEs and startups through its platform.
This includes the successful crowdfunding campaigns for companies like Sneaker Laundry, which has one day left of its offer but has nearly cracked $600,000, and Australian Honey Ventures, which recently secured $1 million in just 30 minutes on Birchal.
The platform was also behind some of Australia's top CSF raises in 2021, including Unhedged, Medibis, Bubble Tea Club and Good Empire.
The co-founder says the success of CSF platforms like Birchal and competitor Equitise has been driven by a number of factors, notably an increased appetite from retail investors and the acknowledgement that having a stake in the SME space is now a core part of a diversified investment portfolio.
“Early stage funding has just been so difficult in this country for so long. What founders tells us is that this has been a revelation,” Vitale said.
“The ability to go out to your most passionate customers, fans and supporters in a legal way, making a regulated offer of securities, it’s unlocked this source of capital which has been sitting on the sidelines.
“People’s appetite for risk has increased too - you see that recently with crypto and day trading - and this shows that people are taking a more active interest in building their wealth. Startups, SMEs and venture investments really should be a part of everybody’s strategy for building wealth.”
In addition, Vitale notes how CSF has democratised investing in smaller companies, a pathway previously only open to high net wealth investors making a private investment.
“Previously it’s just been high net worth individuals and institutional investors that have been able to access these venture investments, but we’re hoping to move this alternative asset class and bring it into the mainstream,” he said.
While CSF is taking off and emerging as a more popular investment vehicle for retail investors, Vitale says he thinks platforms like Birchal will not become competition for established markets like the ASX, rather a complement to them.
In addition, Viitale says Birchal is a great place for private companies to test the waters with transparency and shareholder engagement - core tenants of the public markets.
“What we do is very different. A lot of the companies [on Birchal] are very different companies that list on the ASX, and I think we could be a really nice complement to it,” he said.
“The world changes a lot when you become a listed company. I think that there probably needs to be this middle ground to help companies institutionalise so they’re ready for some of these later stage opportunities.”
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