If you have a company (or even a business that you are prepared to roll into a company) with a turnover under $25,000,000, you have the potential of being able to raise capital direct from the public by utilising the Crowd Sourced Funding Equity Raising amendments that were made to the Corporations Act about 4 years ago.
Why would you do this? You may have problems with banks understanding your vision or you might not have sufficient security to offer to a bank for a loan.
There are alternatives that are available for private companies including:
A private company, or an unlisted public company, is able to apply to a Crowd Sourced Funding Intermediary (there are 16 of these entities which have been appointed by the Australian Securities and Investments Commission, to assess whether a company meets the requirements to be able to raise capital as a Crowd Sourced Funding Equity Raising Company – a company selects one of these Intermediaries to work with in the capital raising process).
The company’s group international turnover must be under $25,000,000 and the value of its group international assets must be under $25,000,000. The company must have, at least, two directors. The company needs to go through the formal application process with a Crowd Sourced Funding Intermediary and prepare a Crowd Sourced Funding Offer Document for the Intermediary for review and acceptance. The Intermediary will place this, and other documentation relative to the company, onto their website where people, who are interested, can view it. If they decide that they wish to invest they can then do so on the appointed Crowd Sourced Funding Intermediary’s website.
A company can raise up to a maximum of $5,000,000 in a 12 month period from the public via the Crowd Sourced Funding Intermediary’s website without having to publish a Prospectus or enter into any personal guarantees with any of the new shareholders. The shareholders receive Ordinary shares in the company.
To go through this process, companies will need a Business Plan which clearly articulates the directors’ and leadership team’s vision for the company including the strategies they intend to implement so that the vision can be achieved.
The directors and the leadership team need to gain a clear understanding of the various rules and regulations that apply to this type of capital raising.
Experienced business advisors are able to assist companies to gain a clear understanding of the Crowd Sourced Funding Equity Raising process, assist the companies in the preparation of the Crowd Sourced Funding Offer Document and introductions to Crowd Source Funding Intermediaries so as to assist in the overall process of being able to raise capital.
The listing on the Intermediary’s website can only be for a maximum of 90 days and, if the capital raising has been successful, the Intermediary will pay the net proceeds from the fund raising after deducting their pre-negotiated fee direct to the company’s bank account.
The Crowd Sourced Funding Intermediary plays no further role with the company, unless later that year or a following year, the company wishes to raise more capital which can be undertaken up to the $5,000,000 per annum threshold.
Towers Business Development Pty Ltd is an experienced business advisory organisation which can assist companies through this entire process – from the initial briefing on how Crowd Sourced Funding Equity Raising operates, updating of the company’s Business Plan, introductions to crowd Source Funding Intermediaries, assisting the directors in the selection of the Crowd Sourced Funding Intermediary, preparation of the Crowd Sourced Funding Offer Document, discussions with the Intermediary on the contents of the Crowd Source Funding Offer Document and assistance with the processes that are required once a successful capital raising has been concluded.
Peter Towers, Experienced Accountant, Company Secretary, Director and Business Consultant, has had significant exposure to the development of the Australian Crowd Sourced Funding Equity Raising market. If you would like to have a discussion relative to the facilitation services that Towers Business Development Pty Ltd can provide, please don’t hesitate to contact us:
You are most welcome to visit the Towers Business Development website (www.towersbusiness.com.au to get an overview of the services that can be supplied.
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Want to know more about the services that Towers Business Development can supply to assist your business in its business growth? You are invited to visit the Towers Business Development website; or contact Peter Towers:
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