Australia’s fintech industry has called for the fast adoption of stalled private company equity crowdfunding legislation to help more Australian small-to-medium sized businesses access the funds they need to grow.
Legislation supporting crowdfunding for private companies was introduced to the House of Representatives in September last year hasn’t progressed.
FinTech Australia chair Stuart Stoyan today called on Federal MPs to work together to give priority to the legislation when Parliament returns next week.
He also called on legislation to start immediately after passing the Australian Parliament rather than a six month delay.
The legislation would give hundreds of thousands of Australian businesses the ability to crowdsource up to $5 million a year from retail investors, capped at $10,000 per retail investor, in return for equity in their company.
The legislation will also build on the highly successful launch of crowdfunding for unlisted public companies. Earlier this month the first seven companies, including Equitise, Birchal and OnMarket, were licensed by corporate regulator ASIC to offer this service.
Digital bank Xinja, one of the first crowdfunds to go live following the licence approvals, raised more than $1 million — with half of that coming on the first day — through Equitise.
About 99% of Australia’s businesses are private companies.
“Our inquiries show that this legislation has in-principle support across the political spectrum so we see no reason why it cannot progress in a speedy manner,” says Stoyan.
“Australia’s crowdfunding system has had an agonising and long gestation, dating all the way back to 2013 when an independent government review was launched into the issue.
“It’s now time to bring a complete crowdfunding regime to life and therefore give businesses a vital new source of funds which are currently not available.”
OnMarket CEO Ben Bucknell says: “Equity crowdfunding will give our small and medium sized businesses the tools to grow by giving them access to the funding they need. The next important step is to extend it to include private companies to give Australians the choice to invest in both public and private companies and grow more Australian businesses of the future.”
Jonny Wilkinson, co-founder of Equitise, says: “It’s been great to see the equity crowdfunding regime finally live in Australia, and we have already delivered a fantastic raise for one of our first startups using the new regime. But in order to make it work best for as many companies as possible, we urgently need the amendments to be passed as soon as possible.”