Equity crowdfunding (ECF) has surged by 62 per cent across all Australian platforms in the last two years, with fintechs reaping the biggest rewards according to the recently published Equitise Industry Report 2021.
Jumping from $28.3 million (FY19) to $46 million (FY21) in total ECF volume, the demand to own a slice of promising businesses shows no signs of slowing down.
Fintech dominates the space, having received investments of $19.5 million across 24 raises, and accounts for 40 per cent of the top 20 raises in FY21.
Sydney-based Equitise co-founder and managing director Jonny Wilkinson says ECF only became possible in 2018 after legislation governing crowd-sourced funding (CSF) changed.
That year, the door opened for proprietary companies with less than $25 million in assets and annual revenue to raise up to $5 million via ECF during a 12 month period.
“It’s just a matter of time and investors and companies becoming au fait. Obviously, the platforms [are] getting set up and growing their audiences," Wilkinson told Business News Australia.
“We always expected that. Similar to the UK, which is the most established market, years one and two are pretty slow to get going and then it ramps up significantly thereafter.”
Top 20 Equity Crowdfunding Raises for FY21
|Company||Founder(s)||Capital Raised||Location||Year||Closing Month|
|Thrive||Ben Winford & Michael Nuciforo||$3,000,000||Melbourne||2021||Mar|
|Coinstash||Ting Wang & Mena Theodorou||$2,800,000||Brisbane||2021||Apr|
|Unhedged||Peter Bakker, Glenn Vanbavinckhove & Saskia Albers||$2,344,053||Sydney||2021||Jun|
|1Question||Issac & Ann Elnekave||$1,892,740||Sydney||2021||Jun|
|Bubble Tea Club||Jenny Le, Pamela Yip & Tim Huang||$1,648,055||Melbourne||2021||Jun|
|LITT||Brent Thompson & Peter Salom||$1,500,000||Perth||2021||Mar|
|Batch Brewing Co||Andrew Fineran & Chris Sidwa||$1,500,000||Sydney||2021||Mar|
|Seabin||Andrew Turton & Pete Ceglinski||$1,200,000||Mullumbimby||2021||Jun|
|QPAY||Zaki Bouguettaya & Andrew Clapham||$1,149,658||Sydney||2021||Jun|
|Good Empire||André Eikmeier||$877,674||Adelaide||2021||Apr|
|BrewDog Group Australia||James Watt & Martin Dickie||$821,100||Brisbane||2021||Mar|
|Parpera - Tranche 1||Daniel Cannizzaro||$800,000||Sydney||2020||Sep|
|Ultimate Driving Tours||Anthony Moss||$719,500||Melbourne||2021||Jun|
|Foresense Technologies Ltd||Glenn Weiland||$657,000||Perth||2021||Mar|
|Azura Consulting||Samuel Wood & Tim Bloore||$403,000||Sydney||2021||Apr|
|Raine Scooters||Marc Alexander, James Murphy & Michelle Mannering||$372,533||Melbourne||2021||May|
“With increased technology and consumer expectations plus the Royal Commission's spotlight on the financial services industry, fintech startups are increasingly turning to the crowd as a means of raising capital,” said Wilkinson.
ECF platform Birchal remains a key player, with companies such as non-alcoholic beer company Sobah signed up to the site, in the footsteps of Outland Denim and PetCloud.
Perth-based brewery Spinifex Brewing Co is currently live on Equitise and has raised $1.6 million in a matter of days.
“The drinks industry, in particular craft beer and craft distilling, also has a strong crowdfunding track record in Australia," Wilkinson said.
"Investors get the opportunity to support the brands they enjoy and resonate with - while also receiving great investor rewards.”
In terms of sectors, the alternative proteins market is hot, having bagged $3.6 billion in 2020 which is expected to rise to $4.2 billion by the end of this year.
Wilkinson believes animal-free meat products will be the next ECF success story; by 2040, plant-based or cultured meat products will account for 60 per cent of all meat sales.
“Companies like Beyond Meat have exploded with its IPO being the best performing by a major US company in almost two decades," Wilkinson said.
“Your Food Collective is creating traction in its equity crowdfunding campaign through its branding built around online grocery penetration, sustainable supply chains and ‘better for you’ eating habits.”
“Since opening nearly four years ago, the company has grown on average 135 per cent year on year, with a revenue of $1.7 million, on track to be tripled this year.”
Equitise and Birchal account for over 80 per cent of the $30 million raised during the last calendar year. Since receiving its equity crowdfunding licence in 2018, 40 startups have raised capital through the former platform, with more than 8,000 investors getting involved.
Wilkinson highlighted the four biggest industries to watch in the last few months of 2021 were direct-to-consumer (D2C) and online shopping, sustainable food alternatives, telehealth and craft breweries or low to no alcohol alternatives.
“E-commerce is on a growth trajectory, as the pandemic changes how we shop. D2C contributes about 10 per cent of retail in Australia, compared to the 20-30 per cent of the overall retail level seen overseas - set to reach $4.5 trillion by the end of this year globally,” he said.
"Tbh skincare has turned over $798,000 in the last 18 months and baresop has sold over 3,000 units since launching in November last year.
“Both digitally native companies are seeing exponential growth during the pandemic."
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