Australia is where Eve Picker, founder of Small Change, was born. Since both Australia and equity crowdfunding are near and dear to her heart, she follows with interest the progress of equity crowdfunding down under.
Legislation for Crowdsourced Funding (CSF), as it’s called in Australia, was a long time coming. While other markets around the world were taking off, the Australian market stagnated as the Federal Government deliberated for more than two years. Finally, in early 2017 the Crowdsourced Funding Act 2017 passed into legislation. This bill, however, only applied to unlisted public companies and there were concerns that this would deny small to medium enterprises access to crowd-sourced funding. The Government acted quickly this time and amended the bill in the same year to include proprietary companies, which are similar to Limited Liability Companies in the US.
Of course, included in this legislation are significant requirements and restrictions aimed at protecting investors and businesses alike. Investors are limited to investing AUD $10,000 annually, and during the same period a business can’t raise more than AUD $5 million. And businesses who make more than AUD $25 million a year, or have the same value in assets, cannot participate in Crowdsourced Funding at all.
These rules might seem restrictive but still, at the 2-year mark, people are investing. PledgeMe co-founder Anna Guenther says “Overall we’ve seen $50 million raised in the equity crowdfunding space across Australia and New Zealand in 2019, and I have a feeling there will be more to come in 2020.” Her five predictions for 2020 include the rise of social enterprises that give back to their communities, more diversity including indigenous and female-led businesses and a geographical spread into regional areas.
Australia’s Fintech Industry is already growing rapidly. Let’s see what happens next.