What is Equity Crowdfunding?

Invest In Exciting Startups You Believe In

Equity Crowdfunding allows investment in early-stage companies that are aligned to investors passions and interests. It lets you to get in early, joining an exciting startup as a shareholder. On the flip side, for the founders of these early-stage companies, they acquire a crowd of investors who care about their brand. 

Low Barriers to Entry

Equity Crowdfunding requires only a small amount to be invested with minimum investments for offers starting from as little as a few hundred dollars. This means, unlike other investment routes, it’s highly accessible to everyone. Investing is also super simple, taking only minutes. 

Anyone Can Invest

Equity Crowdfunding was created to enable “everyday” investors access to great investment opportunities. In the case of Equitise, anyone in Australia over the age of 18 can invest in the retail offers on the platform.

Diversify Your Portfolio 

Equity Crowdfunding provides an easy and powerful way to diversify your portfolio for different types of assets. There are also no limits on the number of companies in which you can invest, allowing you to create your own diversified portfolio of small investments focusing on startups that you feel are good investment opportunities.

The Companies are Carefully Selected by the Platform 

Before launch, a company has to go through a rigorous due diligence process in order to be accepted by Equitise. We aim to select companies that have the highest chance of success for the potential investors spending weeks to months looking at the financials, team, business model, offer specifics and future plans.

High Potential Returns if the Company is Successful 

Similar to venture capital, investing in private companies with Equity Crowdfunding can carry greater risk, but it can also bring greater returns if the business is successful and either pays dividends, is acquired or lists on stock exchange.

Funds Returned if the Minimum Funding Target is Not Reached

Every Equity Crowdfunding campaign sets a minimum and maximum funding amount. This is to ensure the company has enough capital to undertake the growth activities outlined in the offer document. If the minimum amount is not reached, all funds are returned to the investor. 

Equity Crowdfunding is open to both retail and wholesale investors.

1. Retail Investors: Individual investors above the age of 18 who are an Australian citizen. Retail investors can invest up to $10,000 per company per year but are free to invest in as many companies as they choose. To invest, retail investors simply have to create an account, verify their identity and invest via the offer page.
2. Wholesale Investors: In Australia, the definition of a wholesale investor is someone who has a gross income of $250,000 or more per annum in each of the previous two years or net assets of at least $2.5 million. Sophisticated or Wholesale Investors are not limited in how much they can invest in any offer. They also aren’t shielded by the same benefits and protections as Retail Investors. Sophisticated and Wholesale investors must present Equitise with a certificate issued by a qualified accountant before investing more than $10,000 in an offer.

For more information on who can invest, see our blog post here.

Even if you have never invested before, the process is easy and takes only minutes. 

1. Create an account with Equitise 
2. Upload your choice of ID to verify your identity
3. If you’re a wholesale investor, you will need to upload your s708 certificate
4. Head to the offer page of the business you wish to back and click invest!
5. For a complete step-by-step guide on how to invest, see our blog post here.

1. Brand Awareness and Advocates: An Equity Crowdfunding campaign runs for approximately 3 months, and increases brand awareness for the company through channels such as press, social media and email. At the end of the process, the company has a ‘crowd’ of investors who become brand advocates. 
2. Opportunity for Loyal Customers to Join the Business: Customers are a company’s most important asset, Equity Crowdfunding allows a business to invite their customers to join them, rewarding them for their loyalty and giving them the opportunity to become further involved. Many founders even use their ‘crowd’ as a sounding board for changes within the business and new initiatives, asking their opinions and inviting feedback. 
3. Simple and Alternative Route for Fundraising: Conventional fundraising methods, such as venture capital, are often tedious. On the other hand, Equity Crowdfunding makes the pitching process faster and simpler and allows a start-up to efficiently tell its story.

Like all investing, there is risk involved in Equity Crowdfunding. As the company's we raise for are generally early-stage there is the real risk it will fail and your investment will be lost. We ask that you therefore only invest in what you can afford to lose. However, on the flip side getting in early in a company's journey also means there is potential for higher returns.  

How Will I Make a Return on my Investment?

1. Initial Public Offering (IPO): If the business grows to a point where it decides to list on the stock market, an investor will be able to sell their shares on the ASX.
2. Mergers & Acquisitions: If another company acquires the company, the existing shareholders might be paid out for their stake at the current share price which might be more than the purchase price. 
3. Share Buyback: If management decides to buy back equity (shares) from its investors at a share price higher than the share price at which the shares were issued (this would require shareholder approval, and a selective buy-back would require a special resolution usually 75% of shareholders in the class affected).
4. Dividends: If the company continues to grow, then the board may choose to pay dividends to shareholders.