PwC’s The World in 2050 report predicts that the Australian economy will drop from its current rank of 19 to 29 by the middle of the century.
The end of the Australian mining boom and a lack of investment in the industries and businesses of the future, are the main causes of this decline.
Innovative new businesses are Australia’s best hope of maintaining strong economic growth and job creation.
In fact, the World Economic Forum, Stanford & Endeavour global study of 380,000 businesses in 10 countries concluded that “the top 5 per cent of all companies analyzed contributed to 72 per cent of their countries’ aggregate total revenue and to 67 per cent of total jobs. These companies are characterized for being young and presenting high rates of growth”.
High-potential businesses need capital
Access to capital is the single greatest roadblock for high-growth businesses in Australia, according to the Ernst & Young reports for the G20 Young Entrepreneurs Alliance (YEA).
The Australian Bureau of Statistics suggests that between 250,000 and 300,000 new businesses are created each year in Australia, yet Australia is not investing in the sustainability and growth of these businesses, or its economy.
In FY2014 about $91 billion was invested in unlisted equities in the US, and if the US is an unfair comparison, consider Israel with a population of just 8 million.
In 2014 Israeli high-tech and life sciences capital raising set an all-time record as 688 companies raised $3.4 billion, a recent IVC and KPMG report stated. In the same period, Australia raised just $516 million for 93 companies out of around 30,000.
There are a few Band-Aid solutions
The emergence and rising power of crowdfunding has partially helped to ease this financing gap with rewards-based services like Kickstarter and Indiegogo helping to raise funds from the crowd in return for rewards and the pre-sale of products.
This has provided valuable social proof for concepts that investors wouldn’t fund, such as the Oculus Rift virtual reality headset or the Form 1 3D printer.
However, for serious funding rounds traditional crowdfunding just won’t cut it. Equity crowdfunding, a new evolution of the crowdfunding model, has started to fill this gap.
Websites like Angellist and Crowdfunder.com have emerged as solutions for companies trying to raise smaller rounds, but even these often can’t raise the amount required for a high growth enterprise to cross the ravine of the Series A Crunch.
Funding platforms alone don’t solve the real problem of access to capital for entrepreneurs, which is the astronomical gap between what entrepreneurs think being investor-ready means and what investors actually need to see.
What is the solution to this Series A crunch?
CapitalPitch, the world’s first start-to-finish Series A equity funding platform, bridges this gap by taking new businesses, training them to be investor-ready, and then connecting them with a network of investors.
This innovative equity funding platform hence provides investors exclusive access to a very carefully curated community of investor-ready businesses at a time when their valuations are realistic and they need help the most.
“We believe entrepreneurs are solving the world’s biggest problems. By easing the Series A crunch we enable more innovative businesses to raise capital and grow,” says Jeremey Liddle, co-founder and CEO of CapitalPitch and also G20 YEA Australia President.
Jeremy told Anthill that they focus specifically on Series A funding because that is when start-ups are ready to graduate into scale-ups, and that is the exact moment when they often encounter the Series A crunch, which is particularly crunchy here in Australia.
“We believe Australia’s economy should thrive beyond the decline of mining and property investment, and we hope that by enabling more businesses and investors to connect and grow we’ll be a catalyst for positive change,” he stated.
How is CapitalPitch doing so far?
CapitalPitch was in development for 12 months, and has now been operational for 9 months. 40 companies and another 45 partners from 20 countries have already approached CapitalPitch since January 2015 to assist them with Series A capital raising ranging from $500,000 to $10 million.
In response to this overwhelming demand, CapitalPitch has designed a unique, efficient and affordable six step capital raise process which targets businesses and helps them perfect their business models and communications.
The first step of this six step capital raise process, the CapitalPitch eValuation, is complimentary and now available for all Australian businesses. In just five minutes and only 14 questions a business can quickly obtain a detailed eValuation score, report and indicative pre-money valuation.
Businesses also receive a valuable investor communications checklist (also provided complimentary) detailing the essential elements required to create a world class investor-ready package.
Jeremy revealed that they have had 60 businesses complete the eValuation, and have three businesses that have had commitments of $50,000 to $5 million.