Australia’s investing and entrepreneurial landscape welcomed a dramatic change last week with the opening of the nation’s first online equity crowdfunding platform.
VentureCrowd, an initiative of Artesian Venture Partners, said its equity crowdfunding platform was ready for business with 200 registered investors and 36 startups pre-screened by the best Australian accelerators, incubators, angel groups and university programs. The announcement came just as a new overseas rival emerged in OurCrowd, which also opened shop in Australia last week.
Australia, thus, joins a list of nations led by the pioneering U.K. and U.S. that allow the modern-day investing method, democratising the world of angel investing as well as easing the onerous funding tasks faced by entrepreneurs.
Numbers point to humungous potential
Right now, only Australia’s “wholesale investors,” – as defined by the Corporations Act – numbering 207,000 high net worth individuals, with estimated assets of $625 billion can invest on VentureCrowd, or OurCrowd. Each has the opportunity to turn an angel investor but, obviously, needs to recognise the risks as well.
As numbers reveal, the possibilities are striking — even if VentureCrowd can tap 0.1% of the $625 billion in assets held by the high net worth individuals, it could garner $625 million. Besides, it is also conceivable – or probably imminent – that the program would be opened to many more investors in the near future.
“What VentureCrowd will do is provide new avenues of funding for startups, enable a new generation of investors to take an equity interest in early-stage ventures that could potentially be the next OzForex, Freelancer, Atlassian or Bigcommerce,” said Jeremy Colless, managing partner of Artesian Venture Partners.
Risk is still the name of the game
“With the recent passing of the JOBS Act in the US and closer to home, Malcolm Turnbull’s support for revised crowdfunding legislation, there is a decided shift in attitudes to online equity crowdfunding as an investment proposition,” he added.
Unlike early crowdfunding programs like Kickstarter or Australia’s own Pozible, VentureCrowd will let investors receive equity, not souvenirs, in exchange for their investments. The qualified investors can invest as little as $1,000 in a startup and VentureCrowd says it will encourage investors to build a diversified portfolio of over 15 startups in order to mitigate the risky nature of the asset class.
Also, VentureCrowd as well as OurCrowd promise to offer startups that have been previously vetted by independent venture firms, accelerators and the like. This not only reduces risk to eventual investors, most of whom will be unable to independently exercise due diligence on the startups.
Among the first, prescreened, startups raising funds on the VentureCrowd platform are:
TokenOne – which has developed security technology that allows users to log into secure sites with a single unique TokenOne PIN. TokenOne is a portfolio company of accelerator Blue Chilli.
Whispa Music – an online music collaboration tool that allows musicians from around the world to write music together.
Simply Raw – a startup specialising in raw snack bars suitable for vegans, people with coeliac disease and other special dietary needs.