Equity Crowdfunding

Written by Scott Gunther
Investment Point of view Ventures

Being a Corporate VC, at IAG Firemark Ventures, we see hundreds of startups and scale ups each year, who are showcasing their game changing solutions. Some pitches we see are first class, some share a solution trying to find a problem. But regardless of their unique offering or quality of the presentation, startups all have something in common. They are seeking $$$ to take the next step and make their dent in the universe.

Often families & besties either directly or indirectly help startups in their very early days. Others bootstrap. Others do both. Either way it’s a slog, but you have to start somewhere. Look at some of the world’s most successful startups; almost all got going this way.

Then there is competitions & grants, and even accelerators that can give startups a leg up. There’s actually a heap of these out there. Yet many feel too proud to explore this route, and others are just unaware the possibilities they present. Accelerators & networking hubs actually help you by being around like-minded folks, and lots of opportunities flow just by getting amongst it.

Angel Investors do still exist and can help with an early seed round. And if you do expand enough to get to a typical $500K-$2M Seed Round, you are making traction.

Typically VCs are looking for startups with a high growth velocity, and when they do, they inject funding in return for an equity stake.   

And many Corporate VCs are investing for financial gain like the VCs, are investing for strategic benefit to see how they can leverage the startups tech, data and customers.

Whilst there are lots of options and VC funding is hitting record highs in Australia, most of it is hitting the later stage startups. It was reported that only one third of Australian startups have secured funding. Let’s face it – it’s tough to secure that level of funding to grow your business.

But Equity Crowdfunding in Australia is gathering momentum and becoming a great step stone for early stage startups. It can help build the bridge to grow, before successfully getting into a full funding round.  before growing and successfully getting into a full funding round. And the number of individuals and investors wanting to get a small stake in a startup is growing too, even if it’s still a speculative bet.

Platforms such as Equitise, Birchall and OnMarket are maturing and continue to add different campaigns with success. Some recent equity crowdfunding success stories include fast growing neo-bank Xinja, who secured a further $2.5M from over 1,500 investors.

Last month another fast-growing startup, Shebah, the female ride sharing service, secured $3M from over 2,000 investors. Both these campaigns oversubscribed and exceeded expectations. And both these companies have the funds they need to grow to the next level. We expect they’ll be seeking some serious formal funding rounds in the years to come.

Whatever your strategy is to secure funding, here are a few points to consider when making the pitch!

1. You need real customers, not just pro-bonos.

2. You need to have a full financial position including burn rate, not just your projected 12 month revenue.

3. You don’t just need a product, you need a product roadmap for the future….don’t be short sighted!

4. Have some great advisors and mentors. Be humble.  You don’t have all the answers.

5. And lastly have a Data Strategy. So many startups don’t know the value of their data. Sometimes your data is worth more than your product or solution itself!

Good luck in getting the $$$ and we hope to speak to you soon at some stage here at IAG Firemark Ventures.

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