Experts Endorse Crowd Sourced Funding Equity Raising

Issue 034

Are you missing out on the capital on which your successful small or medium sized business needs to grow?

There’s no real reason you should be, if you run a SME that meets the requirements for an all-new capital-raising process.

Crowd Sourced Funding Equity Raising (CSF) has seen a rapid uptake amongst those companies, who have been first to market, since the process was legalized for small proprietary companies here in Australia back in October last year.

More than $22M has already been raised as capital for small and medium sized businesses, in less than five months.

That’s pretty remarkable, isn’t it?

So, if your business is on the hunt for capital, Crowd Sourced Funding Equity Raising is a path that you and your accountant should seriously consider for your company.

The problem is, up until now, many accountants haven’t taken the time to learn all the ins and outs of this new process, and simply keep referring their clients to the traditional banks.

Banking finance is often a millstone around the necks of small and medium-sized businesses.

If you’ve had, or currently have, any loan finance with banks, you’ll be well aware of what a hassle it is, with requirements for:

  • personal guarantees;
  • your property tied up as security; and
  • monthly repayments.

Some proactive accounting firms have already worked out how Crowd Sourced Funding Equity Raising can benefit their SME clients.  Some of those clients have now gone to market and are well cashed up, ready for future growth.

As an SME business owner, you should investigate how this financial breakthrough can offer your company access to capital without the onerous obligations that banks impose.

Don’t miss the bus on this!

One of the best places to start your investigation is on our website www.esssmallbusiness.com.au

My company, ESS Small Business, provides professional information to the accounting industry, but also deals directly with people running their own SMEs, who want to know what’s going on.

Armed with this information, you’re then able to go to your accountant fully prepared and ask the tough questions.

As part of keeping businesses informed, I host regular free webinars, featuring the latest news on developments in Crowd Sourced Funding and other aspects that affect the SME world.

As part of my next webinar, I’ll be featuring a detailed interview with Ben Kooyman from the Endeavour Brewing Co, one of the first SME brewing companies to be funded under Crowd Sourced Funding Equity Raising.

After watching Ben, you may find that his company is not a whole lot different from yours.

Ben’s company raised a total of $1.25M.

The full interview of how the capital-raising process unfolded will be in the webinar and his story makes for very interesting viewing.

Ben told me that 579 retail investors contributed $556,700 after an initial raising with Endeavour’s existing shareholder base generated $700,000.

That $700,000 is what the industry refers to as ‘pre-seed capital’.

How successful does Ben think the raising was and what were the pitfalls he encountered?

You’ll find out when you join me on my upcoming webinar on Thursday, 28 March 2019 at 11.30am AEST/12.30pm AEDT.  (Click here) to secure your webinar access.

As a bonus, I’ve also interviewed four of the ASIC-approved Intermediaries to get an insider’s view of how well the funding end of the process is working.

Intermediaries are the people you’re going to need to go out to their pool of retail investors to get your offer funded.

They have two key roles:

  • ensuring that all the ASIC regulations are obeyed; and
  • taking your Offer Document to market.

There are presently 13 Intermediaries and our ESS team tracks their performance month by month.

Crowd Sourced Funding is growing so quickly that it now has its own industry association, CFIA.

Matt Pinter is the Chairperson of CFIA and the Managing Director of the Intermediary company - Billfolda.

He says Billfolda’s experience shows that small retail investors are more willing to fund companies, that go out and raise some ‘pre-seed capital’ from people, who already trust in the company and its operations.

Endeavour Brewing is a prime example.

Those ‘friends of the company’ are normally employees, existing shareholders, close friends, family and customers/clients.

Once those investors have seen the ‘show of faith’, retail investor funding tends to become a lot easier.

Billfolda has adopted a policy of taking their fees as equity in the companies, for which they raise funds.

Arthur Acker from Equitise, who raised the funding for Endeavour Brewing, claims his company is the most experienced Intermediary in the business in Australia.  Mr Acker says his company made the first Australian Crowd Sourced Funding Equity Raising Offer early last year, initially raising $2.8M for an all-digital bank.  In the second tranche that quickly followed, Equitise raise a further $2.2M for the same bank, bringing its total raise to $5M, the maximum allowed within a twelve month period.

Mr Acker claims Equitise has raised capital for 40 SME companies in Australia and New Zealand, where they’ve been operating for four years.

Alan Crabbe from Birchal says some accountants understand the process well, but many still need to get themselves up to speed on how the new form of capital-raising works.

If your accountants don’t know much about the new process, then you may have to enlighten them, or even start looking for a more proactive accounting firm that better meets your needs.

While most of the Intermediaries will consider Offer Documents across a broad-range of industry sectors, several have now decided to become specialists by only raising capital for specific industries.

Matt Hinds’ AgCrowd is one of those.  AgCrowd has its focus set firmly on the agriculture and energy sectors.

He says his company has been assessing a number of potential offerings in recent months and is very close to launching its first listing to its pool of investors.  Most Intermediary companies have a pool of between 20,000 and 30,000 retail investors.  One group even claims 600,000.

The clear message that is coming out from the heads of all these Intermediary companies is that raising capital this way is not just a ‘rubber stamp’ process.

However, with professional input from your accountants to complete all the required documents, and a willingness on your behalf to contribute to the process, getting your Offer Documents accepted by the Intermediary and properly funded should not be too onerous.

In fact, the ESS Small Business pro-forma documentation is designed to help ensure that process runs very smoothly for you and your accountant.  Please let your accountant know that our pro-forma documents are available.

The benefits of raising capital through Crowd Sourced Funding Equity Raising for your small and medium sized business are substantial.  They include freeing up your cashflow and providing necessary capital to fund expansion.

I believe it’s a major move forward for the small and medium-sized sector, and perhaps the most important business innovation for a generation.

Please take the time to watch the full interviews during my webinar on Thursday, 28 March 2019. Click here to register.

After hearing the Endeavour Brewery case study and what each of the Intermediaries has to say, I’m sure you’re going to want to learn more about Crowd Sourced Funding Equity Raising and how it could apply to your business.

Everything you’ll need to know initially is available free on our website ESS Small Business, Crowd Sourced Funding - Learn More and more detailed information is contained in our product pack, which is available for a fee.

Any product that’s purchased from us is fully backed by the ESS Small Business Full Money Back Guarantee.

Hoping you can make it to my upcoming webinar on 28th March 2019.  Book now.

Have a great day.

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Episode 34 - Experts Endorse Crowd Sourced Funding Equity Raising

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Experts Endorse Crowd Sourced Funding Equity Raising

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