Equity Crowdfunding is the new way for everyday investors, mums and dads, and the millennial generation, to invest in early-stage and growth-stage businesses. Unlike platforms like Kickstarter (which gives you rewards for crowdfunding), Equity Crowdfunding enables a large group of individuals (‘the crowd’) to invest in early-stage businesses in return for part-ownership of the business (equity).
Where traditionally, this capital raising space was dominated by wealthy individuals, venture capitalists and angel investors, now through OnMarket, everyone can handpick, gain a stake and invest in start-ups, early-stage and growth-stage businesses.
This innovative type of funding has recently been enabled in Australia by the Crowd-sourced Funding Act 2017. As seen from the successful operation of Equity Crowdfunding overseas, this disruption to the way firms can raise finance is an exciting one – the extent of Equity Crowdfunding stood at $2.5bn globally in 2015, and some companies have already raised more than £1m each in the UK. So it is clear that there is great potential in Australia, where investor interest is high and early-stage businesses are increasingly welcoming this type of funding.
What Equity Crowdfunding will mean for the investor is that anyone and everyone can now invest in start-ups and growth-stage businesses, by being able to choose companies they feel passionate about and gain part-ownership of.