By Jim Bulling
International banking group Investec Australia has purchased a 20% stake in equity crowdfunding platform Equitise. Equitise, which is based in New Zealand, was founded in Australia in 2014, but has developed its business model in New Zealand as a result of slow development to crowdfunding regulation in Australia. The deal values the startup at close to AUD$10 million.
Equitise co-founder Chris Gilbert has stated that with the investment provided by Investec it has plans to expand into Singapore in the next twelve months, and then further into Asia, focussing on countries with regulatory systems similar to that of New Zealand.
Gilbert states that the slow changes to Australia’s regulation of equity crowdfunding and problems with the current proposed legislation as the reason for its expansion into Singapore. The legislation which was passed in the House of Representatives on the 10th of February 2016, will limit crowdfunding to startups with less than AUD$5 million in turnover, and limit the amount they can raise to AUD$5 million.
Gilbert cites the AUD$5 million asset and revenue test and 5-day cooling off periods as making the legislation unworkable. This follows similar criticisms from other crowdfunding groups such as VentureCrowd who argue that the proposed legislation cannot be properly enacted without some reform to the Corporations Act 2001 (Cth), and without letting groups like themselves and Equitise act to aggregate investment into a single source.
This deal again demonstrates the current growth and recognition of equity crowdfunding for start-up investment by the market. It also highlights the lost opportunity to startups looking to raise funds in Australia as a result of inadequate regulation.
See the Australian bill on crowd-sourced funding here.