THE FIRST seven licences have been issued for crowd-sourced funding (CSF) intermediaries to allow them to provide their services to help unlisted small to medium businesses raise money from investors.
The Australian Securities and Investments Commission (ASIC) issued the licences under the new CSF regime and it means eligible public companies will now be able to use it to raise capital by making offers of ordinary shares to investors via the online platform of one of these companies.
The CSF regime is designed to provide start-ups and small to medium sized companies with a new means to access capital to develop and grow. CSF offers are subject to fewer regulatory requirements than other forms of public fundraising.
"ASIC has been assessing applications as a matter of priority, as suitable intermediaries needed to be licensed before fundraising under the new regime could commence," says ASIC Commissioner John Price.
"Intermediaries have an important gatekeeper role which will be key to building and maintaining investor trust in crowd-sourced fundraising, so we are pleased to have now issued the first tranche of authorisations," he says.
The newly licensed intermediaries have now been added to ASIC's register of AFS licensees and include the early adopter Equitise, Birchal Financial Services, Big Start, Billfolda, Global Funding Partners, IQX Investment Services (Capital Labs) and On-Market Bookbuilds.
As part of the announcement, Birchal has already opened three expressions of interest campaigns for consumer brands SAMPLE Brew, GreenCo Water and Oscar Razor and says there has been strong early interest with several more planned over the next few months.
A 'watershed' moment for the crowd funding industry
Birchal co-founder Matt Vitale says the issuing of the licences is a major event for the CSF industry.
"We've called it in the past a watershed moment for capital raising in Australia and it really is the first time that small businesses are able to offer their shares directly to investors and advertise them widely using social media," says Vitale.
"It really is something for milllenial investors and the new economy."
Equitise co-founder Chris Gilbert said before now, this early stage investment was only available for high net worth investors or venture capitalists.
"This groundbreaking change means Australians can now put their money behind what could become the next Atlassian or Canva and support early stage local companies raising up to $5 million," Gilbert says.
"We have led the charge to change this legislation for the past three and a half years to give all Australian investors the opportunity to invest in early stage companies," he says.
Another of the successul licencees, Capital Labs, is a dedicated life sciences equity crowdfunding platform which was one of the first to market digital investment platform bringing together investors and life science innovators. Capital Labs is part of iQ Group Global.
Unlocking opportunities for retail investors
"On one hand this presents an exciting new funding option for Australian startup ventures," says Dr George Syrmalis, founder and CEO of iQ Group Global.
"On the other, it unlocks systematic investment opportunities for retail investors, that historically have been missing from startup venture funding."In any biotechnology enterprise, tomorrow's challenge is to create new medicines that can prevent incurable diseases.
"However, today's challenge is to get to tomorrow. Equity crowdfunding certainly enables today's challenge".
On 29 September 2017 the Corporations Amendment (Crowd-sourced Funding) Act 2017 and associated regulations came into effect which established regulatory framework to facilitate crowd-sourced equity funding in Australia.
One of the key objectives of the regime is to reduce the regulatory burden on smaller companies associated with raising funds from the public via the issue of ordinary shares.
Feature Article:Everything You Need To Know About Crowd Funding
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