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Is equity crowd funding on the rise?

Charlie Gunningham
Charlie Gunningham
// // Several local companies have either closed or are currently engaged in an equity crowd-funding campaign. We hear from three of them about the experience so far...

// Several local companies have either closed or are currently engaged in an equity crowd-funding campaign. We hear from three of them about the experience so far…

Crowd-funding has been around for several years now, but until fairly recently has been the domain of B2C ‘reward’ campaigns where companies pre-sell new products for consumers signing up to buy them.

Bicycle camera company Cycliq famously raised over $1M this way, before listing on the ASX in 2016.

Equity crowd-funding (ECF) – where buyers get a piece of company stock rather than a product – is a relatively new phenomenon in Australia, after it was first legalised in 2016, with the first seven ECF marketplaces being granted their licenses the following year.

Gaining momentum

At the start, companies had to either be (or agree to convert to) a public unlisted company, which did not prove a popular option and excluded many startups from going down this road.

However, this rule was amended by Australian legislation in September 2018, allowing regular private limited (‘Pty Ltd’) companies to engage in ECF. Basically, any company with revenue or gross assets less than $25M could use the new funding mechanism, raising up to $5M over a 12 month period.

This meant Australian startups could now look at equity crowdfunding as a legitimate source of venture funding. No surprise then that we are seeing more use of ECF this year. If that last few months are any guide, it might be be gathering some steam in WA.

Local campaigns

Earlier this year, Freo-based Credi successfully raised $250k from 133 investors, while West Winds Gin raised $933k, both off the Equitise platform.

Currently, three other local companies – Rhinohide, Urbotanica and Tiller Rides – are running ECF campaigns, two on Equitise and one on Birchal.

Marc Berryman’s 4WD body armour company Rhinohide has already raised $136k on Equitise, with 13 more days to run on the campaign. The minimum investment is $250 per person and the company has set a $100K-$500K total fund raising range as its target.

The investment values the business at $3.8K pre-money, and the funds will be used to grow into the US market, which Marc says is 25 times larger than the Australian market.

Julian Ilich’s Roadster e-bike company Tiller Rides is looking to raise between $1.5M and $3M using the Birchal platform.

In the first 9 days of the campaign, the Freo-based company has seen expressions of interest from 155 people looking to invest up to $760K in Tiller.

“I believe this strong response demonstrates people’s desire to be part of a company that is not only making a difference, but by selling an unrivalled high-margin product in a booming global e-bike market, is also a great investment opportunity,” Julian told Startup News.

Julian Ilich, Founder and CEO, Tiller Rides

Investment in Tiller also starts from as little as $250, with the campaign closing in 17 days time.

Meanwhile, back on the Equitise platform, Ray Hart’s Urbotanica business is looking to raise funds in order to ramp up local production of its ‘grow your own’ UrbiPods.

“Urbotanica is targetting the disruption of the $210B urban ag market with customer-enabling technology, ” said Ray.

“In the last two years, we’ve made 2,000 Urbipods, gained 1,500 happy customers and earned more than $350K in sales. We now need funds to grow.”

Ray Hart, Urbotanica founder and MD

Investment starts at $320 and closes in mid October.

When you add up these deals – and a few of them have some time to run yet – the ECF route is now starting to make an impact in funding local startups. Many of these companies have tried other routes – local investors, grants, even Shark Tank – and had varied success there.

Perhaps the rise of ECF is not surprising, for as Startup News has reported many times, early stage tech funding in WA has been subdued for a while.

ECF now opens up another channel. It will be interesting to see how these particular campaigns end up, whether great businesses can be built as a result and if more and more local startups turn to equity crowd-funding to source their startup or scale up funding.


PLEASE NOTE: Like any investment, Equity Crowd-Funding (ECF) is risky. Investors may lose their money and the business may not achieve its objectives. You should consider any offer document and the general risk warning contained in the offer document in deciding whether to apply under the offer. Startup News never makes investment recommendations, and the reader should not take any content on as investment advice.

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Charlie Gunningham

Charlie Gunningham

Former co-founder, GM, CEO Business News and Accelerating Commercialisation adviser. Charlie has spent 20+ years in Perth's startup scene, as founder, mentor, adviser, writer and investor. There's nothing he likes more than helping early stage tech startups ... and drinking coffee, shiraz or playing in a blues band. Email Charlie here.
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