15 Step Checklist for Crowd Sourced Funding Equity Raising

Issue 028

Are you a naturally sceptical person?

Most of us are a little, I guess, especially when we hear about new ideas involving access to money.

Well, Crowd Sourced Funding Equity Raising isn’t a scam or a ‘get rich quick’ scheme, and it’s not ‘crowdfunding’ that we hear so much about on social media.

'Crowdfunding' is when people are asked to donate money to a worthy cause, like a family left destitute after their house burns down.

It's a social media thing, and...  there have been problems.

In the non-business world, people are able to utilise social media to assist in raising money for virtually any type of legitimate reason – there is virtually no government control.

Crowd Sourced Funding Equity Raising is the “business crowd funding model” and it has required significant amendments to be made to the Corporations Act to enable Crowd Sourced Funding Equity Raising to operate.  There is strong government supervision of the capital raising process via the Australian Securities & Investments Commission (ASIC) appointed Crowd Sourced Funding Intermediaries (7 companies with Australian Financial Services Licenses – AFSL) and ASIC.

Crowd Sourced Funding Equity Raising is something that could be of real benefit to you, if you operate a small or medium-sized business.

Using this new process, you could raise up to $5M a year from the public, just like 'the big boys' do.

Just think.

You could clear your bank loans and personal guarantees, or fund your next expansion.

Crowd Sourced Funding Equity Raising has just been legalised here in Australia, but has been funding small and medium-sized businesses, like yours, in the U.S., New Zealand, Canada and the U.K. for nearly ten years.

Directors of small and medium-sized businesses will need to enhance their business skills by having a working knowledge of how Crowd Sourced Funding Equity Raising operates.

The 15 Step Checklist for Crowd Sourced Funding Equity Raising guides you through the identification process to determine whether your business/company could be potentially eligible for the Crowd Sourced Funding Equity Raising Status.

If you are currently operating in a non-company status, your business would have to be rolled into a company, if you wish to utilise Crowd Sourced Funding Equity Raising to raise capital.

So let’s start the Crowd Sourced Funding Equity Raising Journey!

In the first instance, there is no discrimination based on the:

  • type of industry in which your company/business operates
  • age of your company/business

The 15 step checklist is divided into 2 sections:

  1. Section A – Legal Requirements For Crowd Sourced Funding Equity Raising Status
  2. Section B – Subjective Tests Utilising Key Characteristics That We Believe At Least One Of Will Apply To A Company Able To Describe Itself As Being Eligible For The Status Of A Crowd Sourced Funding Equity Raising Company

Section A:  Legal Requirements For Crowd Sourced Funding Equity Raising Status:

  • Group annual turnover less than $25 million per annum
  • Group gross assets valued at less than $25 million
  • Neither the company nor any related party is listed on a stock exchange anywhere in the world
  • Neither the company nor any related party is included in an official list of a financial market operated outside of Australia
  • Neither the company nor any related party intends to utilise the funds sought to be raised by the offer to issue a credit facility to the company or a related party of the company (including investment in securities or interests in other entities or managed investment schemes).

If you are able to answer yes to each of these questions you can move on to the “subjective tests”.

Section B:  Subjective Tests Utilising Key Characteristics That We Believe At Least One Of Will Apply To A Company Able To Describe Itself As Being Eligible For The Status Of Crowd Sourced Funding Equity Raising Company:

  • A company/business with turnover over $2 million that wishes to “scale up” to a larger company.
  • A fast-growing ambitious business/company.
  • A company/business keen to expand its business operations.
  • A company/business wanting to acquire other businesses
  • Company/business with a CEO with a “big audacious idea”.
  • A CEO and a management team with an exciting vision based on their business’ systems of what could be achieved in the future.
  • A company with debts that the directors would like to repay, save interest and enable the security that, in all probability, has been supplied by someone else, to be released.
  • A company with borrowings from the "bank of Mum and Dad".
  • A company with a succession problem that an injection of new capital would assist in sorting out.
  • A company with a new product, process or service that does not qualify for the status of an Early Stage Innovation Company because of the company’s age, turnover or expenditure being higher than the allowed amounts.

Sceptical or not, don't you owe it to yourself to at least find out what it's all about?

(Click here) and spend about 2 minutes to view our latest video.

Then, if you like what you see, you should go and talk to your accountant about the possibilities for your business to determine whether you qualify as a potential Crowd Sourced Funding Equity Raising Company, to assist you with the processes needed to develop a Crowd Sourced Funding Offer Document and to negotiate a listing of your company on a Crowd Sourced Funding Intermediary's website.

If your accountant is unsure about the process, you could suggest that he/she visits the ESS BIZTOOLS' website è Crowd Sourced Funding Product Package or contacts Peter Towers peter@essbiztools.com.au or ring 1800 232 088.

If your accountant is unable to assist, you could contact one or more of our subscribers, who have access to our Crowd Sourced Funding Equity Raising Product Package by visiting our website - ESS Small Business and clicking on to "Find an Accountant/Adviser" and then entering your postcode.  The system will identify accountants in all near your postcode that you could then contact for a discussion.

Want to know more about the Crowd Sourced Funding Equity Raising process (Click here)?  By visiting the ESS Small Business website, you'll be able to obtain some free articles on Crowd Sourced Funding Equity Raising and gain a more in-depth knowledge by subscribing for:

  • Understanding the CSF Offer Document Process (5 articles)
  • Overview of the Crowd Sourced Funding Offer Document (8 articles)

If you are looking for a detailed overview of the Crowd Sourced Funding Equity Raising process you could subscribe for the Corporate Governance Network Workshop - Webinar Number 3 which includes a fairly detailed overview of the Crowd Sourced Funding Equity Raising process prepared for a company director.

You can access the recording of the webinar at ESS Small Business' website -  Corporate Governance Network for a subscription of $78 (incl GST).

If you have any questions, please do not hesitate to send me an email:

peter@essbiztools.com.au or Telephone me on 1800 232 088

 

Have a great day!

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Episode 28 - 15 Step Checklist for Crowd Sourced Funding Equity Raising

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15 Step Checklist for Crowd Sourced Funding Equity Raising

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