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Thursday, 20 February 2014 18:16

Meet Australia's first equity crowdfunding platform Featured

By
Artesian Managing Partner Jeremy Colless Artesian Managing Partner Jeremy Colless LinkedIn

The Australian economy may or may not be open for business but VentureCrowd, billed as Australia’s first online equity based crowdfunding platform, definitely is.

The platform, which opened this morning, allows wholesale investors to buy equity in high growth-potential startups and has already signed up over 200 registered investors and 36 startups which have been pre-screened by the a group of Australian accelerators, incubators, angel groups and university programs.

Developed by Artesian Venture Partners, VentureCrowd explained in a statement that it lets startups pitch and secure funding online from a crowd of investors in exchange for equity in the business.

In contrast to existing crowdfunding platforms such as Kickstarter and Indiegogo, which allow people to support causes, or gain access to a new product at a discounted price, VentureCrowd offers business ownership and the potential equity upside of the startup, sort of more like Dragons' Den.

According to Artesian Managing Partner Jeremy Colless, there are a very large number of sophisticated investors in Australia who have not previously invested in the startup space.

“The wholesale investor market in Australia is large with 207,000 wealthy individuals in Australia sitting on $US625 billion ($684 billion) worth of assets," Colless said in a statement.

"Until now there have been major barriers to entry for investors in startups. An investor either had to have a large amount of money and time available to screen and review each potential startup investment personally, or had to commit as much as $250,000 to a venture capital fund to qualify as a limited partner.”

Wholesale investors can invest as little as $1,000 in a startup.

“While traditional asset classes have been slowly recovering from the global financial crisis, the Australian startup ecosystem has been enjoying remarkable growth. The last 3 years have seen the arrival of an array of startup accelerators and incubators including Startmate and BlueChilli (Sydney), AngelCube (Melbourne), Slingshot (Newcastle), UOW iAccelerate (Wollongong) and iLab (Brisbane).

“Corporate incubator programs including Telstra’s muru-D and OptusSingtel innov8, and new venture capital firms such as Blackbird Ventures, Blue Sky Ventures and Square Peg Capital have contributed significantly to the growth of the startup environment here in Australia. There have also been successful and sizeable technology listings on the ASX by OzForex and Freelancer. In 2014, other successful Australian startups such as Atlassian and Bigcommerce may see $1 billion plus listings in the US,” said Colless.

“What VentureCrowd will do is provide new avenues of funding for startups, enable a new generation of investors to take an equity interest in early stage ventures that could potentially be the next OzForex, Freelancer, Atlassian or Bigcommerce.

“With the recent passing of the JOBS Act in the US and closer to home, Malcolm Turnbull’s support for revised crowdfunding legislation, there is a decided shift in attitudes to online equity crowdfunding as an investment proposition.”

Speaking about the launch of the VentureCrowd platform, Steven Maarbani, a director of the Venture Capital team at PwC, said “"There is no doubt that equity based crowd funding is growing globally and that this is the beginning of a significant change in the way finance is delivered more broadly."

"Early stage finance is undergoing a significant evolution globally. The gap in supply of early stage capital is gradually being filled by equity based crowd funding platforms that are able to provide a more efficient and cost effective way for SMEs to obtain growth capital than traditional methods.

“Equity crowdfunding platforms are opening up the early stage securities asset class to a new group of investor, characterised principally by a desire to have greater control over their investment decisions and the flexibility to make small investments in a wide range of early stage companies. It is likely that SMSFs will be interested in the investment opportunities presented by online platforms."

The Australian federal government is currently in consultation on the issue of equity based crowdfunding. In October 2013, the federal government issued a discussion paper titled ‘Crowd Sourced Equity Funding’ which considers legislative amendment in Australia. If legislative changes were passed in parliament, it would open up online equity crowdfunding to larger proportion of Australians.

Until the current legislation changes, VentureCrowd is open to wholesale investors only and each potential investor must submit to a strict screening process in order to be eligible to invest via the VentureCrowd platform.

According to VentureCrowd some of the first startups on the platform include:

TokenOne – A sophisticated security technology which allows users to log into secure sites with just a single unique TokenOne PIN
Whispa Music – An online music collaboration tool that allows musicians from around the world to write music together.
Simply Raw – A startup specialising in raw snack bars suitable for coeliac, vegan, and other dietary requirements. Currently stocked in over 200 locations nationwide.

For more information, or to sign up as an accredited investor visit the VentureCrowd website here.


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