Aussie startups rake in $86m from largest equity crowdfunding year to date

Australian equity crowdfunding has hit a new high, with $86 million raised from more than 43,000 investments in FY22 making the latest financial year the biggest yet for the asset class.

The findings are from crowd-sourced funding (CSF) platform Birchal’s report on the sector’s performance during the 12 months to 30 June 2022, which also detailed how $185 million has been raised since the regime began back in 2018.

According to the ‘Funded!’ report, Birchal maintained its leading position in the CSF industry during FY22, completing 68 of the 98 successful offers (70 per cent of the total) and facilitating $62.4 million of the total raised during the year.

The platform was followed by Equitise (responsible for 13 raises securing $11 million for Australian companies) and OnMarket (which facilitated the raise of $8 million for 12 companies).

“Australia’s CSF industry continues to grow from strength to strength, with over $185m raised across over 240 successful offers since the regime began back in 2018. In the last couple of years, we’ve achieved truly accelerated growth, as more and more businesses and investors become aware of the CSF regime,” said Birchal’s board of directors Matt Vitale, Kellie Morton and Adam Vise.

“Birchal, and the CSF industry have emerged from the COVID-19 pandemic as a strong partner to forward-thinking businesses, with the support of thousands of forward-thinking investors, facilitating capital at times when others could not.”

It was a year marked by milestones for an industry which is truly coming of age, including the record $5 million raised in a single CSF offer achieved by sustainability-focused home cleaning and hygiene products maker Zero Co.

Coming in second place was medicinal cannabis company Montu which raised $3.5 million from 1,490 investors, while Birchal itself was hot on the startup’s heels - securing $3 million from 595 investors in raise facilitated by its very own technology.

Other companies that made up the Top 10 CSF offers for FY22 were Neutrog ($3 million from 782 investments), Our Cow ($2.6 million), Black Hops ($2.2 million) and Kester Black ($2.2 million).

On a sector-by-sector basis, food and beverage companies dominated - with 33 successful offers raising a total of $29.5 million - representing 34 per cent of all funds raised through CSF platforms.

Beer and alcohol-related business made up half of the total food and beverage investments during the year, with 12 campaigns raising a total of $15 million for companies including Black Hops, DrinkWest, Bridge Road Brewers, Sobah Beverages and more.

Sustainability was the next most invested category, raising $13.2 million - $5 million of which went to CSF darling Zero Co. Other companies that completed CSF raises in this category included Hero Packaging, Line Hydrogen, Plat Protector Packaging and Indigo Power.

Other popular industries were health care ($7.8 million in funding volume), agriculture and farming ($7.8 million in funding volume) and financial services ($7.5 million in funding volume).

By state, Victoria had the most companies benefiting from CSF, with 35 offers completed raising $28.4 million. The state was followed by New South Wales where 30 companies raised $400,000 more than their southern counterparts.

In Western Australia, $12.5 million was raised across 12 CSF offers, while in Queensland $11.5 million was raised across 17 equity crowdfunding initiatives. South Australia rounded out the pack with $4.6 million raised across four offers.

During FY22, a major switch occurred whereby growth companies (meaning businesses with revenue of more than $1 million) represented the highest proportion of successful CSF offers for the first time.

Of all offers, 34 per cent were completed by growth companies, while the proportion of pre-revenue businesses completing a successful CSF offer declined to just 21 per cent of the total. This compares to 38 per cent in FY21, representing a 44 per cent decline.

Things are looking rosy for FY23 too, with Birchal reporting that $5.7 million has already been raised on the platform in the first two weeks of July.

This includes a $2.2 million raise completed by t-shirt maker Threadheads, $1 million raised by fashion company Citizen Wolf, and 2021 Melbourne Young Entrepreneur Awards finalists memobottle completing a $408,000 CSF raise.

West Australian distillery and bar Republic of Fremantle today announced it achieved a total investment of $1 million today from 449 shareholders, with the largest investment placed in the final four seconds of the raise facilitated by Birchal.

The additional funding will allow the Republic to construct a mezzanine level to house its Gin School and functions, taking the capacity from 100 patrons to 300 patrons, as well as building a second bar and dining area.