Innovative fast growing businesses needing to raise additional capital
Crowdfunding is an important source for small businesses to acquire capital for growth in Australia because unlike the US, there is very little support from the Australian government. The four main crowdfunding models are donation based, reward based, equity based, and debt based.
In 2016 Australia is introducing a Crowd-sourced equity funding (CSEF) scheme that:
- Allows entrepreneurs to raise funds—up to $5 million per year—from a large number of individuals in return for equity in their company.
- Will give companies a five year exemption from the normal reporting and disclosure requirements that apply to public companies. That is, no need to hold annual general meetings or produce audited financial statements.
- Will be available to Australian public companies with a turnover and gross assets of less than $5 million.
- Allows individuals seeking to invest using the CSEF platform the ability to invest up to $10,000 per company, per year.
Crowdfunding is a viable option for innovative fast growing businesses that need to raise additional capital to grow in Australia. Further details are available at National Innovation and Science Agenda.