After doubling the amount of capital raised for founders every year for the past three years, investment platform VentureCrowd is tapping into its community of wholesale investors for a funding round of its own.
VentureCrowd, helmed by founder and CEO Steve Maarbani, is looking to raise up to $14.5 million via convertible notes from wholesale investors as part of its ‘most ambitious growth phase to date’.
At the time of writing, the company has already locked in just over $6 million, and is moving toward its minimum target of $8.5 million.
Speaking to Business News Australia, Maarbani said the time was right for VentureCrowd to shore up funds as it looked to expand both geographically and technologically now that the business’ foundations were in place.
“We’re at the stage where we’re looking at what is next in this market. From a technology perspective, we’ve digitised the entire process of investing in these kinds of assets from deal awareness to investor onboarding, investor nurturing, investor education, and due diligence, all the way through to portfolio management,” Maarbani said.
“We’ve proved that the business is solid and its foundations are solid, and now it really is an opportunity to take it to the next level, and we’ve earned investor trust to do that.”
The next level for VentureCrowd is a two-piece play; one that will see the group expand into Singapore to capture the South East Asian market, while also implementing a blockchain-based tech solution to future-proof the company and the investment products it offers.
If all goes to plan, VentureCrowd is targeting gross revenue of approximately $30 million by the end of FY25, which Maarbani said would give the company a valuation of between $225 million and $450 million (based on a valuation range of 8.5x to 15x gross revenue).
“This is the moment where our little baby grows up,” Maarbani said.
“Building this beautiful little team and foundational infrastructure for such a long time hasn’t been easy - this is not an easy place to play in the markets - but the team has done a really great job and now it’s time for us to take the next step.”
The founder was not perturbed by ongoing global concerns about inflation and rising interest rates. Rather, he believed the iron was hot for companies like VentureCrowd that offer an alternative investment pathway for young Millennial and Gen Z investors who are the soon-to-be beneficiaries of the ‘largest intergenerational transfer of wealth ever’.
“What that means for the financial services sector is really the most important customer and investor group in the world is about to become Millennials and Gen Zs, because they will be holding the purse strings to the most significant volume of capital in the world,” he said.
“If that happens as predicted then they are the people who are going to drive the alternative investments markets. The things that they value above all else will drive the venture capital businesses that will be funded.
“The way they look at the world is completely different to the way previous generations did, and so we will see much more diverse founders being funded, we will see significantly greater volumes of impact driven investments being funded, we will see much less of the profit-at-all-costs mentality playing out in the venture capital space, and all of that is a really good thing - we’re behind that.”
The future for VentureCrowd is the South East Asian market where the Australian business will be ‘replicated’ from a base in Singapore once requisite licences are approved.
Maarbani said the move would give investors in the region the opportunity to participate in both Australian and local investment rounds on the VentureCrowd platform.
According to the founder, the startup landscape in the region is ‘exciting’, with ‘really cool things happening’ in hubs like Singapore, the Philippines, Thailand, Malaysia and Indonesia.
“We want to be able to offer both our capital raising service but also the investment opportunities to that market,” Maarbani said.
“It’d be exactly the same business, just expanded into South East Asia.
“It will mean that Australian companies looking for South East Asian investors will be able to do that by coming into the VentureCrowd platform.”
It will also work both ways too, enabling South East Asian companies to secure funding from Australian wholesale or retail investors.
“Our entire business is built to assist founders to raise the capital that they need to fast track their companies and that’s because we don’t think the private capital markets are very efficient - they don’t work as effectively as they need to in order to turbocharge innovation and entrepreneurial ecosystems,” Maarbani said.
“There needs to be different kinds of capital in the private capital markets and it absolutely needs to be access to capital in a digital format so we can increase the number of people - not just in Australia but in South East Asia and beyond - that are participating in providing capital for these kinds of founders and diversifying the way in which those decisions are made.”
Once this first geographical push is made, Maarbani said the company is considering the US and UK for future expansion plans.
“As soon as the team is in place and operational then we’ll look at one or both of those secondary markets,” he said.
Backing the blockchain
A Web3 bolt-on is also on the cards for VentureCrowd once the latest funding round closes, elements of which the company has already started work on.
The founder said VentureCrowd’s ‘VEST Communities’ platform is just weeks away from being released, which will give angel and investor syndicates a digital home to raise and close capital for the kinds of investments they want to engage with.
The platform will also give founders access to VentureCrowd’s proprietary digital cap table, enabling them to launch a capital raise essentially with a ‘press of a button’.
VEST Communities is just one part of the puzzle. A blockchain-based tokenisation strategy will also be implemented to create a secondary market, giving investors liquidity without the need for a traditional exit.
Maarbani said he saw this strategy as the ‘future of wealth-tech’.
“Now is the time for us to take the next step, which means moving to cutting edge technology,” he said.
“We believe that this is all about the tokenisation of real-world assets and applying the security, immutability and speed of blockchain to the investment markets.
“When you add all that up, not only do we think that’s going to drive way more new capital into the private capital markets but it may also be that companies may never need to list.”
As such, Maarbani said that now was a ‘really exciting time for venture capital in Australia’.
“Despite all of the headwinds from things like FTX and Silicon Valley Bank, I think people should remember that we’re heading into the most transformative period of innovation and human evolution that we’ve ever witnessed,” Maarbani said.
“Therefore, there will be very exciting things coming through the innovation and entrepreneurial ecosystems - the private capital markets just need to be aware of those opportunities and be prepared to fund them, and I think they will.”
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