By Georgina McCreadie on Friday 20 March 2015
An Australian equity crowdfunding platform has partnered with a group of angel investors to boost investment to small businesses.
Equity crowdfunding platform VentureCrowd has partnered with investor group Sydney Angels. Under the partnership Sydney Angels will refer startups to the platform. VentureCrowd allows people to invest a minimum of $1000, and suggests that investors be diversified across a range of investments. VentureCrowd is the online arm of Artesian Venture Partners. Sydney Angels, a group of about 70 high net worth investors, has made 35 investments since 2008, and in 2011 raised a $10 million sidecar fund.
David Jackson, Sydney Angels, he said the partnership is “adding to the ecosystem” by allowing startups to tap into investors who aren’t high-net worth individuals.
“For Sydney Angels, equity based crowdfunding is great because it allows us to be able to access a different group of investors. I know mum and dad investors and people who might not be high-net worth individuals but they want to have an opportunity to invest in these startups. Everyone’s heard of the Facebooks and Googles but without equity crowdfunding it’s often hard for the mum and dad investors to get a piece. It’s high-risk investing, don’t get me wrong, but for them to put a small percentage of their investment portfolio into high-risk ventures that might give them a high return… will be a good opportunity.”
Jackson added that equity crowdfunding in Australia needed to catch up with the US and UK, where equity crowdfunding is becoming a more developed market. The crowdfunding market is still relatively small in Australia. However, awareness of the sector as a source of funding for small businesses is starting to grow and this obviously helps the platforms develop and scale. Currently in Australia the Corporations Act restricts participation in equity-based crowdfunding to accredited investors, those that have income above $250,000 a year or a high level of assets. There are only about 400,000 accredited investors in Australia. We will be watching to see whether this limited number of accredited investors is enough to support the nascent crowdfunding industry.
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