Start-ups’ crowd cash

TECH start-ups and small businesses will soon be able to raise up to $5 million per year through crowd-sourced equity funding under new laws introduced into federal Parliament.

The changes mean that from September 29 Australians will be able to invest as little as $50 into early stage companies, giving consumers the chance to own a small stake in a business which has the potential to grow.

Treasurer Scott Morrison announced the reforms yesterday, saying they would allow entrepreneurs to grow their businesses from the ground up.

He said as part of the bill, small businesses wanting access to equity crowd-funding will no longer need to list on the stock market to raise funds.

Unlisted companies with less than $25 million in assets and revenue will be able to raise up to $5 million per year through the new scheme.

Unlike crowd-funding, which is where consumers provide an advance payment to a firm for a product or gift, equity crowd-funding allows investors to retain part of a business for the long term.