Equity crowd funding is an alternative way for emerging businesses to obtain funding and grow, without needing to secure an angel or venture capital investor. Instead, interested individuals can invest and obtain shares in a business via a licensed crowd funding platform.
Equity crowd funding is a valuable opportunity for start-ups with innovative product ideas, as not only can they raise a large amount of money to scale their endeavour, they have the additional benefit of fostering community support for their product or idea. Their crowd of investors are literally invested in the success of their business and become an immediate, engaged audience.
Equity crowd funding is regulated by the Crowd-Sourced Funding Regime, which stipulates the requirements for a business seeking to undertake this process. Our commercial lawyers have assisted numerous clients through their equity crowd funding campaigns and have a thorough understanding of the process, including:
- Completing a company structure ‘health check’ to ensure the company is eligible to undertake the process.
- Getting the company investment-ready in accordance with the Crowd-Sourced Funding Regime. This may include undertaking company re-structures, amending constitutions, drafting subscription agreements and managing intellectual property assets.
- Future-proofing the company with governance and structuring considerations to avoid costly and lengthy processes of re-structuring a company with hundreds of shareholders down the track.
Lawyer Anitah Kumar has assisted several businesses to raise capital through crowd funding, and has enjoyed being part of that journey: “I enjoy the crowd funding process as it’s an opportunity to really understand the inner workings of a business. Through this process we explore the ways businesses can be best structured and protected to maximise their outcomes. We’ve built many ongoing relationships with clients that have started with crowd-funding, and it’s been wonderful to see them grow and succeed.”
If you’re a business looking to scale up and gain investment, contact us to discuss your path forward.