While the $7.4 million is double what was raised in the previous quarter, close to half of it came from just one raise: a record $3 million invested in women’s rideshare platform Shebah. The company also broke the mould by having close to 95 per cent of its investment come from women.
When equity crowdfunding legislation was opened up to proprietary companies last year, many heralded it as a boon for local companies wanting to raise funds.
It allows unlisted companies to raise funds from the general public, with much lower minimum investment thresholds than a typical equity raise.
Around 30 crowdfunding deals have been closed since licences were issued for platforms to offer the funding model in January 2018. Those running the ruler over companies say they now have a good pipeline to work with.
“Looking at the broader funding landscape, we’re not really competing with VC firms. We’re looking at different types of companies that don’t have the luxury of going to VCs or family officers,” says co-founder of crowdfunding platform Equitise, Chris Gilbert.
Equitise has closed eight raises since January 2018, raising $8.3 million.
Gilbert says the platform has been flooded with requests since the model became legal, but guesses around one in 50 pitches have made it to a formal raise stage.
This is largely because the crowdfunding model doesn’t suit many types of businesses, like B2B products that can’t easily rally a crowd.
Platforms selective with raise candidates
The Birchal platform, which hosted Shebah’s successful raise last month, has closed 12 successful deals. Co-founder Matt Vitale says in the context of Australia’s tough lending environment, “strong interest in crowd-sourced funding is expected to continue”.
Vitale also points to the fact crowdfund raises are capped at $5 million, making it hard for the space to compete with venture capital or ASX listings. Birchal thinks this limit is appropriate at this stage in the raise game.
Competing platform OnMarket says it has taken its time bringing startups to the raise stage on its platform.
“We have been very selective in who we bought to market. Eighty-six percent of the companies that we’ve opened to the public have exceeded their funding targe,” managing director Tim Einsenhaur says.
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Emma is the small business reporter for The Age and Sydney Morning Herald based in Melbourne.