The Government will remove obstacles to crowd-sourced equity funding as it aims to open up new pools of financing for startups.
There’s $7.8 million set aside over four years from this financial year for the Australian corporate watchdog, ASIC, to implement and monitor a regulatory framework around crowd-source equity funding including simplified reporting and disclosure requirements.
Crowd-sourced equity is an emerging form of funding which enables startups and entrepreneurs to raise funds on million
While it doesn’t outline a lot of detail, it’s a measure which was expected and has been welcomed by the startup sector.
Jeremy Colless, CEO of equity crowdfunding platform VentureCrowd said he was cautiously optimistic about the government’s plans to open up the funding method.
“It’s great to see the federal government allowing all Australians to invest in high-growth innovative Australian companies with the announcement of equity-based crowdfunding. We will wait to see the details before VentureCrowd opens the platform to these investors but, provided government policy isn’t too restrictive or prescriptive, we support the move,” he said.
The one thing the government has said it would do is broaden the criteria in who can participate. Currently the law only allows for sophisticated investors.
“Allowing retail investors to gain equity in startups through crowdfunding has the potential to massively boost private sector funding for Australian innovation,” he said.
Since launching in in 2013, hundreds of investors have invested more than $2 million cumulatively into tech companies using the VentureCrowd platform, including Ingogo, Fame & Partners, Posse/Beat the Q and CrowdMobile.
“As a successful equity-based crowdfunding platform, we are continuing to educate investors on the potential of high-growth technology companies for investment, as well as the importance of building an investment portfolio. We look forward to seeing how the inclusion of new investors can help grow this important investment method,” Colless said.
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