Investors Turn to Equity Crowdfunding After Stock Exchange Plummets

The stock market has fallen 30% but Equitise has had one of its biggest weeks, raising nearly $1 million

Leading equity crowdfunding platform Equitise last week closed two offers, raising nearly $1 million from 190 investors. This suggests that despite the stock exchange plunging 30%, investors are still participating in alternative investment options that are less sensitive to the current market fluctuations.

The first offer was Kitfit - a RetailTech app. Global from day one and already attracting major interest, Kitfit is changing the game for how we shop online eliminating issues millions face daily. Its equity crowdfunding closed on Monday 16 March, raising a total of $502,000 from 116 investors. In the last day alone, over $65K was invested. Out of the total raised, $469,000 was from NSW with 35-44 year olds being the more frequent investors.

The second equity crowdfund to also close on Monday was Australian-owned health food brand and manufacturing business Food to Nourish. The company raised $446,000 from 69 investors with 43 of those coming from NSW closely followed by 35 from Queensland. The most frequent age again was 35-44 year olds.

Last week the stock market plunged over 30% and is fast approaching the levels of the 2008 Global Financial Crisis. Part of this can be attributed to the economic impact of the virus, slowing down growth and consumption. Another part can be linked to panic selling, with many investors liquidating their assets to avoid further losses, and to have some cash reserves in order to seek opportunities or for a rainy day.

This is perhaps why investors are turning to alternative options which aren’t as sensitive to market conditions. This includes longer-term investment options which are ‘illiquid’ and won’t vary too much from the underlying asset value such as equity crowdfunding. Launching only in 2018, equity crowdfunding allows anyone to invest in an early-stage company that hasn’t listed on the stock exchange in return for equity. As unlisted companies, their returns are a lot less correlated to the market. Whilst investing in early-stage companies carries greater risk, there is potential for greater return and it’s widely been acknowledged that investing into these companies is a great way to diversify your portfolio. With volatile market conditions upon us, there might be no better time than to diversify your portfolio which is perhaps what some of the 190 investors were thinking who invested in Kitfit and Food to Nourish.

Last week Equitise also launched Bondi-born eyewear label Pacifico Optical which already has $74,000 invested. With the market dominated by a few major players who keep prices high, Pacifico offers high-quality, stylish yet affordable eyewear and is raising capital to ramp up their operations and expand. With the majority of its revenue coming from its online store, Pacifico feels that despite current market conditions, their strong sales will continue.

Market correlation and investment returns aside, one of the best things about equity crowdfunding is the ability to support the Australian startups driving the economy from the bottom floor - something that the market desperately needs right now as demonstrated by Scott Morrison’s stimulus package announced yesterday. Startup communities are becoming increasingly important in the modern economy, with funds going straight into company growth and job creation, rather than into the pocket of a senior executive.

Founder of Equitise, Jonny Wilkinson, says: “We love giving everyday Australians the ability to get behind the companies that really are the engine room of our economy. It’s an uncertain and difficult time for many, but investing in longer-term options that don’t fluctuate as much with the market is a smart move. It also supports the economy helping these brave, innovative and exciting startups bolstering long-term growth. We believe the equity crowdfunding industry will remain robust throughout this period.”

Kitfit

Returns for online purchases are at 33% globally, costing retailers hundreds of millions of dollars annually and wasting 70-120 hours a year of consumers’ time. The Kitfit team has created breakthrough technology that is 50 times faster, 20 times more personalised with 10 times the fit accuracy of existing systems. Using a myriad of data, it identifies products in use by people like you from all over the world, only serving you products that actually fit your measurements and meet your needs and taste.

Food to Nourish

Food to Nourish launched in 2013 in Co-Founder Danielle’s Minnebo’s personal kitchen and quickly moved to its first commercial kitchen in early 2014 before relocating in 2018 to a custom-built 600m2 production facility in the Central Coast. Experiencing consistent and impressive sales growth, no other competitor company produces such an extensive range of health food products that are organic, gluten-free and sprouted with 37 product lines stocked in 800+ retail stores Australia-wide, and abroad in Singapore. 

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