Important points to keep in mind for crowdfunding
Choose the right crowdfunding website
One of the most important decisions you will make is which crowdfunding website to use. The most popular reward crowdfunding websites are Indiegogo, Kickstarter, Pozible and Birchal. On these platforms, you set up a campaign funding goal and time period, then users can pledge funds to you.
If you’re looking for CSF options, the most widely used are VentureCrowd, Equitise, OnMarket and Birchal.
Regardless of which you choose, it’s important to double check they hold an Australian Financial Services (AFS) license to avoid crowdfunding scams.
This is a licence that proves the company is authorised to run a financial services business in Australia.
Fees associated with crowdfunding
While each platform has different fees associated with funding, they generally include a payment processing fee and a funding fee. For example, Kickstarter and Indiegogo take a 5% fee for each campaign. Meanwhile, equity and debt CSF platforms normally take a campaign fee and a percentage of capital raised.
Legal issues with crowdfunding
In 2017, the Australian Government introduced the Corporations Amendment (Crowd‑sourced Funding) Act 2017.
The Act includes key legislative changes to protect companies and investors, such as:
All CSF website operators are required to have an AFS licence.
CSF is available to unlisted public companies with less than $25 million in assets and annual turnover.
Companies need to register as an Australian company with the Australian Securities and Investments Commission (ASIC) before they can use CSF.
The ASIC website has more information for business owners regarding the legislation surrounding CSF.