Nov 21, 2017
Equity crowdfunding is forecast to grow tenfold in just 5 years! It’s worth repeating that – equity crowdfunding is forecast to grow tenfold in just 5 years.
Australia is expected to follow crowd sourced funding trends in the United States and United Kingdom as these markets have already adopted crowd-sourced funding reforms which have overseen massive growth in capital raising via crowd-sourced funding platforms.
What an opportunity for accountants and business advisors to create a “new income stream” and, at the same time, assist SMEs that would like to raise capital to assist in the growth of their businesses!
Enable Funding (formerly ASSOB – Australian Small Scale Offering Board) has forecast that the new crowd-sourced funding capital raising market will soar from $119 million in 2016 (primarily S708 capital raising) to $1.5 billion in 2021, which would result in a tenfold increase. (www.enablefunding.com)
Enable Funding believes that the new crowd-sourced funding reforms in Australia will have a similar effect on the Australian crowd-sourced funding capital raising market and investor interest in that market.
Enable Funding has forecast the following crowd-sourced funding equity raising amounts:
2017 – $210 million (primarily S708 and Early Stage Innovation Company Capital Raising)
2018 – $420 million (this will be the first year to have an impact from Crowd-Sourced Funding Equity Raising)
2019 – $688 million
2020 – $1.023 billion
2021 – $1.519 billion
This primarily relates to capital raising forecasts for private companies or private companies which have converted to unlisted public companies.
Enable Funding has a real track record in this market. Enable Funding was founded in 2007 (under the name ASSOB) and is now the largest investment crowdfunding platform in Australia and one of the largest in the world.
Enable Funding is an equity crowdfunding platform that has assisted in the raising of more than US $130 million for issuers since its inception.
Many of these businesses were small/medium enterprises when the capital was raised.
ASIC is expected to finalise the licensing of the first batch of intermediaries for crowd sourced funding shortly. Companies will then be able to commence the capital raising process.
This raises the question; what is your accountancy business going to do relative to this market opportunity? This is a brand new market that no Australian accountancy business, large or small, has any significant link to because crowd-sourced funding equity raising is brand new in Australia.
Our suggestion is that you survey your clients to ascertain those companies with group turnover under $25 million and group gross assets under $25 million who are not registered on a Stock Exchange anywhere in the world.
Once you’ve established this group you could then pose some questions and try and answer them internally:
Does this client want to expand their business?
Has this client talked about purchasing another business?
Is this company contemplating financing a succession plan on some basis?
Is the company paying off loans?
Is the company paying off high credit card debts?
Do you think it would assist these companies if there was an injection of capital into the company? Do the directors have a vision for this business? That’s very important if they are going to attempt to raise capital.
You could then have a conversation with the directors to determine whether they might be interested in considering raising capital by issuing shares in their company.
This will give you the opportunity of outlining to the company directors what’s involved in the journey to become eligible to raise capital as a Crowd-Sourced Funding Company.
Most of these companies will require assistance in the preparation of:
a Business Plan;
Budgets and Cashflow Forecasts;
in the preparation of a Crowd-Sourced Funding Offer Document; and
for the negotiations with the intermediaries to assist the company directors to select an intermediary with whom they wish to work.
Your initial investment to get started on crowd-sourced funding (at our special price celebrating the launch of Crowd-Sourced Funding Equity Raising) is only $299 including GST.
ESS BIZTOOLS has developed a unique Crowd-Sourced Funding Product Package for the Australian accounting/business advisory industries. If you would like to view the preview of the Crowd-Sourced Funding Product Package please (Click here).
We are presenting a free webinar on Wednesday 22nd November 2017 at 12-noon (AEST)/1pm (AEDT) that you are welcome to attend titled “If You Only Want To Do Tax - Don’t Attend This Webinar!”. (Click here) to register to participate in this webinar. The webinar will feature comments on Crowd-Sourced Funding, Early Stage Innovation Company Capital Raising and an accountant’s role in helping clients get ready for this very important new market opportunity.
You are invited to view a webinar we presented, based on our presentation with Marc Johnstone, Chief Operating Officer of Enable Funding at ATSA 2017 in Sydney last month – “Crowd Sourced Funding presents Opportunities to Create New Income Streams”. (Click here).
If you would like any further information relative to “Equity Crowdfunding Which is Forecast to Grow Tenfold In Just 5 Years”, please do not hesitate to contact me - firstname.lastname@example.org, visit www.essbiztools.com.au or www essbasip.com.au. Have a great day.