The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell has welcomed the passing of legislation to extend crowdfunding eligibility.
“Crowdfunding is an alternative source of equity, which is particularly popular with eligible start-ups,” Ms Carnell said. “Allowing proprietary companies access to equity crowdfunding platforms, without having to convert to a public company entity, will provide a substantial proportion of Australia’s small businesses with much needed access to capital.”
The previous conversion process was considered costly and complicated, and managed to put off small businesses from considering crowdfunding.
“With this new legislation, crowdfunding opens up competition in alternative sources of finance, which will help small businesses start, operate and grow,” Ms Carnell said. “It also allows a safer environment for everyday investors – customers, friends, family and the general public interested in novel and exciting business ideas – and not just specialised investors.”
The Ombudsman cited one small businesses, memobottle, who launched their product on a crowdfunding platform, exceeded their funding expectations and haven’t looked back since.
Business Services Partner, Sharon Houghton, from accounting and professional services firm, BDO Australia, also welcomed the fast-tracked legislation.
“This is good news for thousands of Australian private businesses that will now have the ability to crowd-source up to $5 million a year from retail investors, capped at $10,000 per retail investor, in return for equity in their company.”
“The government has previously been criticised for the long and staggered release of this legislation, which was initially introduced in November 2016 however yesterday was a welcome development to the budding industry.” Ms Houghton continued. “BDO is excited to see new capital avenues becoming available for Australian companies and will be interested to see the markets response to the increased accessibility of crowdfunding that comes into effect in late October this year.”