Equity crowd-funding’s Australian launch opens doors to small investors

YOU no longer need to be wealthy to buy into innovative business start-ups, thanks to a new type of investing set to launch early in 2018.

Investors seeking to own a slice of start-up small businesses will soon be able to dive in.

Equity crowdfunding – which will turn everyday Aussies into venture capitalists and angel investors – has been given the green light by the Federal Government and is likely to start matching investors and businesses early next year.

Equity crowdfunding started globally in 2011 and start-up businesses have raised more than $3 billion using its platforms in countries including the US, Britain and New Zealand.

Australian group OnMarket Crowd, one of the first platforms to apply for an equity crowdfunding licence here, says an estimated 200,000 small and medium sized (SME) businesses find it difficult to grow because banks won’t lend them money.

OnMarket Crowd founder Ben Bucknell said previously only rich venture capitalists or angel investors could buy into early stage unlisted businesses.

“Equity crowdfunding is an innovative way to fund someone else’s dream and reap the benefits of being an early stage investor,” he said.

“Through an app or online platform, entrepreneurs will be able to put their businesses up for ordinary investors to consider. In exchange for helping a business raise funds, investors become part-owners in the company.

“It might be organic macadamia nuts or a social justice initiative that wouldn’t satisfy a bank’s strict lending criteria.”

Investors pay between $50 and $10,000 for stakes in the small businesses.

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Source: Equity crowd-funding’s Australian launch opens doors to small investors – News.com.au