Start me up with crowdfunding
FROM gin distillers to energy-boosting mouth strips, opportunities are popping up for investors to grab stakes in start-up Australian businesses with as little as $50.
The Australian Securities and Investments Commission last month licensed seven online platforms that let anyone pump money into emerging businesses, and despite a slow start there is expected to be a surge in opportunities online soon.
It’s equity crowdfunding, where individuals buy shares in businesses well before they list on the stock exchange. This early-stage investment potentially delivers them the biggest profits, but also carries the greatest risks.
One of the seven licensed companies, Equitise, is currently raising money for Xinja, Australia’s first independent digital bank. It’s already raised more than twice as much as its minimum $500,000 target through investment parcels as low as $250. About 700 investors have each injected an average $1800. Equitise expects to unveil more investment opportunities within weeks, including a gin distiller, brewery, boutique clothing company and food chain.
Co-founder Chris Gilbert said some of the opportunities would be wellknown brands.
“The minimum investment will be as little as $50 and (it is) open to anyone over the age of 18,” he said.
“We have led the charge to change this legislation for the past 3½ years to give all Australian investors the opportunity to invest in early stage companies.”
OnMarket is about to launch equity crowdfunding for Revvies, ultra-thin mouthstrips containing caffeine that are already popular with elite athletes and sold in almost 500 retail outlets across Australia.
Revvies is looking to raise up to $450,000 through minimum investment parcels of $250.
OnMarket has also held discussions with a medical cannabis company to raise more than $2 million using equity crowd-funding.
OnMarket founder and CEO Ben Bucknell said the surge of Bitcoin – whether you believed in it or not – demonstrated the “tremendous wealth” that early-stage investors could make.
“It doesn’t come without risk,” he said. “If you want to turn $100 to $115 in the next 10 years, put it in the bank.”
However, the world’s next $1 billion start-up company was likely to be equity crowdfunded, Mr Bucknell said.
“Since we announced we were doing equity crowdfunding, we have had more than 120 companies approach us.”
When announcing the licences last month, ASIC said investors should understand both the benefits and risks of investing via crowd-sourced funding. “Information regarding crowdfunding can be found on ASIC’s moneysmart.gov .au website,” it said.