Crowdfunding in Australia

What is Crowfunding?
I am not going to bore you with detailed definition around Crowdfunding given it is no longer a buzzword. However given some of the readers may be new to crowdfunding, let me to try to explain in a simple way.

"Crowdfunding : is where you are asking general public to trust and fund a project or a venture you are working on. In return you may reward them with your product/s, service/s, equity or add them to hall of fame in honour of their contribution" 

What forms of Crowdfunding is available in Australia?
While Australian government is working on bringing equity based crowdfunding to the general public, in Australia we have access to donation-based and reward-based crowdfunding. These platforms ranges from US based Kickstarter, Indiegogo, New Zealand based Equitise, Pledgeme, Snowballeffect to local Pozible, OzCrowd, Venturecrowd, Mycause etc.  

Donation-based crowdfunding offers general public to donate funds to a good causes. While one could argue why donation-based crowdfunding when we have so many charities? End result may be the same, however donation-based crowdfunding focuses on short-term one-off projects while charities focus on on-going long-term projects.

Reward-based crowdfunding offers general public to make a payment for your project while you offer rewards for the payment. Examples are: A Book project may offer you a free book, A Drone project may offer you a free Drone or a discount for purchase a Drone. 

Where to next?
Once the legislations are in place "unlisted public companies with up to $25 million in annual turnover and less than $25 million in gross assets will be able to to raise up to $5 million via equity crowdfunding platforms over a 12 month period. Giving retail investors to invest up to $10,000 per company in a 12 months period."
While this is a great first step forward and welcome by many local Crowdfunding platforms, unfortunately though we are still lagging behind New Zealand, US, UK etc. In New Zealand they offer companies to raise up to $2m with simpler compliance and obligations. Which is ideal for Startups seeking seed funding, especially at a time when we have a such a vibrant Startup communities around Australia. 

I also like to mention that Ryan Caldbeck the founder and chief executive of the consumer and retail investment marketplace CircleUp wrote last year on TechCrunch stating "Equity Crowdfunding is Dead". However when you read the article in full, he doesn't really say that raising funds via general public (not via a stock exchange or regulatory body) is dead. He is rather referencing to the term Equity Crowdfunding which be believe is wrong instead we should call in Marketplace for Investing. May be he is right or may be general public will continue to use both terms. 

Whatever happens in terms of terminology I am hoping that Australia will continue to thrive by opening-up more avenues for general public (specially mom-and pops)  to invest in great Australian Startups in their early stages. 
   

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