The Australian Parliament, through the voice of Treasurer Scott Morrison, recently introduced a bill aimed at removing the regulatory barriers to Crowd-Sourced Funding (CSF). CSF is a fundraising model that allows individual investors to directly invest in small companies, which might otherwise struggle to access affordable sources of funding. The concept of CSF is better known as ‘equity crowdfunding’ in other countries, and is for instance described as such in the American legislation.
In April 2014, New Zealand passed a new law, granting entrepreneurs the opportunity to use crowdfunding platforms for financial lending and borrowing purposes. The Kiwis aim to be the leading nation in Asia-Pacific for crowdfunding. But unfortunately, almost 5 months after the law has been changed, the Kiwi crowdfunding industry has been stagnate. That, however, is just about to change.
In September 2013, the Corporations and Capital Markets Advisory Committee (CAMAC) – the Australian financial market authority – released a discussion paper about equity crowdfunding and its current regulation, to evaluate it and understand whether there is need to intervene.
A few months later, CAMAC is now calling for the government to pass a regulation that would allow every adult in Australia to invest through equity crowdfunding.
Australian Small Businesses and Access to Finance
Small businesses are the backbone of Australia’s economy, providing 45.7% of the total employment in the private sector. However, many local entrepreneurs complain that access to capital, especially in the early stage, is sometimes more difficult and inefficient than it should be. Australian start-ups have troubles accessing the VC market and other early stage investors – both almost nonexistent – and, as consequence, many are leaving the country to establish in the USA or in Europe.
Crowd Valley COO, Paul Higgins participated as the keynote speaker in New Zealand’s first ever full-day event dedicated to crowdfunding, the Pacific Crowdfunding Symposium. Paul explained some of the company’s recent findings in its Global Crowdfunding Market Report to give some context and insight into the regulatory trends and best practices that we have seen, for example, in the US, France, and Italy.