Sometimes a higher budget can make the whole difference when establishing a new business. Have you ever considered crowdfunding your startup?
One of the most amazing things that have happened in the last years is the power of ‘we’. The power of people coming together, which can definitely make a difference.
In the business sphere, there’s an interesting movement that became very popular and relevant in the past few years – crowdfunding.
Recently, there was a poor child overseas who fell into a pool. The family raised money through crowdfunding to bring the child back to Australia.
This is just a quick of example of how crowdfunding can be a very powerful resource in terms of raising funds to help people and turning difficult causes into a reality.
What is crowdfunding?
The foundation of crowdfunding is very similar to fundraising, except it’s online, done through social media and websites.
The easiest way to understand crowdfunding is to perceive it as a powerful resource capable of raising money and social awareness about all sorts of causes and business ideas.
It’s all about persuading your future target audience into funding and sponsoring your project. The more people involved, the more cash you receive.
How does crowdfunding work in Australia?
Raising money in Australia is covered by the Corporations Act 2001. The process of crowdfunding has rules and regulations on how you can ask people to put money into your business. So, make sure to check them closely before starting your campaign.
Generally, you need a prospectus, rules, regulations and financial services licenses and so on. However, there are exemptions for small companies according to the Corporations Act.
For example, if you are a small company and you raise less than $2 million from 20 people over a 12-month period, then you can skip lots of steps that apply to big companies.
Crowdfunding hasn’t been legal in Australia until very recently unless it’s covered off under those exemptions. Actually, it defeats the purpose for less than 20 people.
On the other hand, a company is now allowed to raise funds using crowdfunding in Australia.
I’m not a lawyer, so I’m just going through some of the rules and regulations we do. I believe you can raise up to $5 million if you’re a public company.
What’s a public company?
A public company can be listed or non-listed and it needs to have 50 or more shareholders to officially become a public company.
Moreover, the process of crowdfunding a limited public company is now possible and authorised by the Australian Government.
This can be an exciting opportunity for all new entrepreneurs, startups, or for people who want to take their business to the next level.
Should you start crowdfunding your startup?
If your company respects the current regulation, then you should investigate if crowdfunding would benefit your startup in any way.
Once you’ve taken care of the legal statements and you’re confident your business will benefit from crowdfunding… well, nothing is stopping you from going forward!
Go ahead and build your campaign, raise funds for your cause or project. Get a bigger budget and use it efficiently to make it happen.
If you’re facing difficulties doing so, we can always make it easier and give you a hand. Let us know how can we assist you now!