New Zealand crowdfunding platform PledgeMe today announced their plans to enter the Australian market.
"Australia is set to legalise equity crowdfunding later this month. We plan to be on the ground there, to connect with potential partners, work with local companies and assess the final regulatory landscape," says Anna Guenther, PledgeMe co-founder.
"We're excited that Australia is finally entering this space, but also cautious," explains Guenther.
"America introduced equity crowdfunding last year, but it seems that over-regulation has stymied the potential of equity crowdfunding there".
Title 3 of the Jobs Act came into force in the United States of America in May 2016.
In the first year, only NZD $52 million was invested through equity crowdfunding platforms in the United States, compared to NZD $12.4 million in New Zealand's first year, despite New Zealand only having 2% of the population of the United States.
"The subdued first year in the US could also be due to the availability of capital, but when running an equity crowdfunding campaign costs $20,000 - $50,000, plus ongoing compliance costs, early stage and growing companies just won't go there."
Australia is looking to introduce more restrictive equity crowdfunding regulations than New Zealand - with investor caps of $10,000, requirements for the companies to shift their structure and become public unlisted companies adding compliance burdens, restrictions on emailing the offer documents, and strict rules around advertising.
“We’re going to do everything we can to help Australia temper their over-regulation,” says Guenther, “but if their legislation doesn’t actually help companies, we won’t stay.”
The Australian Corporations Amendment (Crowd-sourced Funding) Act 2017 provides a legislative framework for equity crowdfunding.
The Act received Royal Assent on 28 March 2017 and will take effect on September 29, 2017.
PledgeMe has received a spot in the HotDesQ programme run by the Queensland government and will be setting up in Brisbane.
The programme provides networks, support, and funding for companies to relocate to Queensland, Australia.
PledgeMe is a crowdfunding platform helping Kiwis to raise money to turn their ideas into reality.
There are three different ways to crowdfund on the platform - funding projects, raising equity from investors, and borrowing from the crowd and repaying with interest through crowdfunding.
To date, the platform has funded over 1100 successful projects, raised over $16million, and has a 51% success rate.