Equity crowdfunding a slow burn, advisers say
The legalisation of equity crowdfunding has met with enthusiasm from those hoping to raise money with it, but financial planners say it will be years before it is taken seriously by investors.
Leading advisers contacted by The Australian Financial Review said no clients had approached them in relation to the new crowdsourced equity funding legislation, which was introduced by Treasurer Scott Morrison on Thursday.
With Industry Minister Arthur Sinodinos set to open The Australian Financial Review Innovation Summit in Sydney on Tuesday, the government is hoping equity crowdfunding will help bring start-ups and innovation closer to the average Australian, and boost support for the “ideas boom” agenda blamed for nearly losing it the 2016 election.
Once the legislation passes the Senate with opposition support as expected, all proprietary and unlisted public companies with annual turnover or gross assets of up to $25 million will be able advertise their business plans on licensed crowdfunding portals, and raise up to $5 million a year to carry them out.
Investors can put as little as $50 and up to $10,000 a year each into an unlimited number of ideas.
However a principal at Bravium Financial Planning, Scott Farmer, did not expect a rush.
“Equity crowdfunding is a new asset class, and diversification is usually a good thing for investors, but we saw things like exchange-traded funds and separately managed accounts take years to catch on in Australia versus the US or UK, and I think this will be no different,” Mr Farmer said.
“But there will be two sub-sectors of people in it from day one: the ones who love the companies being crowdfunded and want to be part of their innovation story, and the investors for whom excitement ranks ahead of actually making money.”
There was no way most financial planners would have time to research single equity crowdfunding deals on behalf of clients, said Will Hamilton of Hamilton Wealth.
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Source: Equity crowdfunding a slow burn, advisers say | afr.com
