Wednesday, 12 June 2013

Australia leading the world in Crowd Funding?




By M McDowell

Daily Telegraph: Can UK “lead the world” in Crowdfunding? Australia might have beaten them too it!

In an interview with the Daily Telegraph this morning Jeff Lynn from Seedrs gave an excellent overview of the equity crowd funding landscape and introduced some great success stories.  The suggestion that the UK can lead the world in equity crowd funding is based on the premise that the UK have granted regulated approval for Crowd Cube and Seedrs while the US grapple with the Jobs ACT.   I would however suggest they all take a look at the Australian Small Scale Offerings Board (ASSOB).  They have helped Australian business crowd fund $133,813,078 since 2005.

The Australian Small Scale Offerings Board (ASSOB), is Australia's leading equity crowd funding platform.  They have taken a wide range of businesses, from seed and start-up stage, to award-winning and government granted companies, as well as more established growth and expanding companies and given them access to growth capital and an easy way to connect with stakeholders

Businesses can promote capital raising campaigns of up to $5 million through the ASSOB Platform and they offer a marketing and distribution channel to inform potential investors of capital raising offers.

ASSOB offers a facility for "secondary" sales of unlisted issued securities.  This makes assob investments much more liquid than the UK equity platforms that don’t have this facility.  It can be assumed they would if FCA would allow it.  The benefit to a platform is that when a “secondary” sale takes place the likelihood is that the money is reinvested in other businesses, therefore continuing the growth of the platform.

The ASSOB help businesses get visibility and the right investing audience.  It could be argued that this is the inevitable next step for GUST and the Angel List.  They are growing databases of both investors and businesses and an ASSOB style platform is the logical next step.
  
However, ASSOB is more than just a capital raising platform they are a training ground designed to enable great people to launch great ideas with the right support. They offer value-added input through due diligence, guidance, expertise and other active involvement, as required, to ensure that companies gain momentum and achieve their maximum potential during their time on the ASSOB Platform.  The UK equity crowd funding sites in their infancy are more focused on the fund raise rather than the mentoring side, however the recent announcement that esynergy’s Investingzone are launching, expect them to capture this space.

The UK equity crowd funding platforms are working with the FCA and are being brought under existing investment promotion and management rules.  ASSOB operates its Platform and compliance tools pursuant to the prescriptive requirements of ASIC Class Order 02/273 (Business Introduction or Matching Services) and section 708 of the Corporations Act (Cth) 2001.  This provides for (in certain circumstances) an issue of securities being made to certain types of investors without a disclosure statement and regulated promotion securities offers.  This matches the UK position however ASSOB do have some investment opportunities for non sophisticated investors.

The Australian Small Securities Offerings Board have been in place since 2005 and the 7 years experience is a valuable case study for Seedrs and the other UK and US platforms.  It also provides a blue print for the regulatory bodies around the world. It looks like they are leading and we should follow.