Communications Minister Malcolm Turnbull wants to promote crowdfunding for Australian start-ups by adopting US-like laws.
In a blog post last night, Turnbull said his recent trip to Silicon Valley, where he met with executives from Google, Facebook and AngelList, had highlighted the importance of crowdfunding to the start-up sector.
But while US entrepreneurs had access to 344 crowdfunding platforms according to a 2013 World Bank report, Australians had only 12.
“Currently … regulatory arrangements in Australia are not particularly tailored to this type of capital raising,” Turnbull wrote.
“The Government is determined to see if we can match the regulatory environment that’s present in the US, here in Australia.”
Turnbull’s comments came after two crowdfunding platforms launched in Australia last week: Jerusalem-based OurCrowd; and VentureCrowd, which is managed by Sydney venture capital firm Artesian Venture Partners.
Both funds invite individuals to buy small amounts of equity in a range of pre-vetted, early stage businesses. But participation is limited to what ASIC defines as “sophisticated investors” who either earn at least $250,000 a year or have at least $2.5 million in net assets.
OurCrowd founder Jon Medved said Australia would benefit from more funding sources, with the ABS reporting that the nation’s pool of available venture capital fell 4% to $5.95 billion in the year to June 2013.
Turnbull said a government review, led by the Corporations and Markets Advisory Committee, could relax current restrictions.
“CAMAC are currently looking into the issue and are scheduled to report back to the Government in April,” he said.
“We will be looking to encourage businesses, particularly start-ups, to use crowd sourced equity funding to pursue innovation and growth while ensuring that appropriate protections are in place for investors.”
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