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What is equity crowdfunding?

So you’ve heard of Kickstarter, right? That’s reward -based crowdfunding, where you make a ‘pledge’ in return for a nominal rewards, like a tshirt or a pre-order of a product a company is getting off the ground. In equity crowdfunding, you are investing into a private, Australian business (us) and receive a shareholding – essentially becoming a small part-owner.

In Australia, companies run their campaigns through an ASIC- approved platform, like Birchal. We’ve partnered with Birchal so the investment process is safe, secure and easy for you to use!

Companies who undertake equity crowdfunding are usually in a ‘growth’ phase of their journey. This means we believe we have a great business model, a product people love and a plan in place to grow from our initial groundwork and market share. Rather and we want to invite our fans and customers to be part of our success

Why do you want me to ‘express interest’ before I actually invest?

We’re running a 3 week Expression of Interest (EOI) campaign so that we can raise awareness for our offer and share our investment details to a select group of people before we go live to the wider public. If you want to be one of the first investors and get on that early bird list, make sure you head to our Birchal page and submit your interest before our offer goes live!

Where does my money go?

During our Offer Campaign (where you can invest), Birchal will hold all investor funds in a trust account until our capital raise is successful and past the closing date. From there we’ll work to issue your shares and Birchal will transfer the money to us to use in our future business plans (outlined in the Offer Document).

How does ROI work with equity crowdfunding?

Equity crowdfunding investment is a little like planting an avocado tree. You plant it, and then wait 10 years for it to bear fruit. Crowd-sourced funding is risky by nature, as issuers (companies) using this facility are usually new or rapidly growing ventures.

Investing in private and unlisted companies is typically a medium to long-term investment. Shares in the companies who raise through Birchal cannot be easily transferred or sold as they are not traded through public exchanges (i.e. the ASX). Due to this, your shares are generally considered to be ‘illiquid’ so you may not be able to sell your shares quickly if you need the money or decide that this investment is not right for you.

However, there are numerous possible circumstances that may create an opportunity for you to “exit” your investment (i.e. sell your shares) or otherwise receive returns. Such as:

• a trade sale of the company to another company
• the company proceeds with an Initial Public Offering (IPO) and listing on a registered stock exchange (e.g. the ASX)
• the company organises a buyback of the shares
• a private sale of your shares to another person
• the company pays shareholder dividends.

The options available to shareholders will be mentioned in our company Offer Document at the time of investment, but we can’t guarantee that any of the above options will occur. Our hope is that our company value will have increased in the event of an ‘exit’, so when that time comes hopefully your shares will have gone up in value!

 

The legal disclaimer we have to put in:

You may lose your entire investment, and you should be in a position to bear this risk without undue hardship. Even if the company is successful, the value of your investment and any return on the investment could be reduced if the company issues more shares. Ask questions, read all information given carefully, and seek independent financial advice before committing yourself to any investment.

What entity can I invest under?

You can invest as an individual, trust or company (including SMSF)

What rules and legislation governs equity crowdfunding?

Crowdsourced Equity Funding (also known as Equity Crowdfunding) is governed by legislation that is covered by ASIC (RG 261) and can only be facilitated through licensed intermediaries (ie. birchal.com).

Are there tax implications with an equity crowdfunding investment? What about if I want to invest from a country outside Australia?

The normal rules apply to your investment in a company via CSF when it comes to tax-time, and we recommend investors consult with an accountant depending on their unique circumstances. If the company on Birchal offering the shares is an E.S.I.C (early stage innovation company), there may be tax incentives for you as an investor. Find out more here.

Investing from outside Australia? Read this first[/vc_column_text][/vc_column][/vc_row]