The article that got me worked up today is here!
I got worked up because it implied that New Zealand was loose in this area and Australia needed to be tougher.
As I say further down ….
“If Australian Government Ministers are walking their talk of “crowdfunding” funding hundreds of small businesses and creating thousands of jobs then best not spend any more time on equity crowdfunding because it wont come from licensed platforms”.
“A dozen or so raises in a year from 5 platforms isn’t really worth investing ministerial time on”.
My full response follows …
Loose is a strong word for a regime in New Zealand that has in one year yielded nearly more platforms than raises.
Ok maybe 10 raises and 5 platforms in a year but considering the legals to prepare a “licensed platform” are not much less than $80,000 loose is hardly the right word to use otherwise there would have been dozens of platforms and hundreds of raises.
Licensed platforms are a throwback to a time when the internet did not exist but regulators did because everything was paper based.
You try in 2015 as a 25 year old to rip people off online with equities, the crowd will catch you long before ASIC or any other authority will. And the 25 year old’s foot prints will be on the internet forever so there is no need for a lot of bureaucrats to continually update registers within a regulatory framework. Unless this practice is disrupted we wont get traction.
If eBay had have been licensed it would never have evolved.
Nor Uber or AirBNB or Bitcoin.
The best words in this article are by Anna Guenther.
“Some of them think there’s this crowd-in-the-cloud that’s just waiting to give them money. That’s not how it works.”
Chris should know this is true from the first raise on Equitise that was not completed by hundreds of random retail investors.
I agree fully with Anna and after personally tracking 320 equity raises from retail investors in Australia I know Anna Guenther is spot on when she says …..
“Money cones from as it says in the article …. Individuals have committed funds to businesses on PledgeMe because they know the product, the brand, or the people running the business”
These are the people the legislation should empower! as there are usually no other investors around at this early stage space yet the legislation and regulations are focussing on the ones not investing.
New Zealand has great legislation but because they went too far and licensed the platforms they will never get the traction that will “create thousands of jobs”.
If Australia does as Gilbert proposes and brings in stronger licensing than New Zealand, and Chris has obviously pushed this point with Treasury and the Hon Bruce Billson MP, then we will get even less traction than they have in New Zealand. A dozen or so raises in a year from 5 platforms isn’t really worth investing ministerial time on.
Chris only needs to check out the first raise on his Equitise platform and reflect on where the money actually came from. It wasn’t hundreds of random people throwing $100 investments at TRNZ Digital Travel Guides but people close to the company and the platform and large sums at that, especially in the last day to close the offer.
There is no evidence worldwide to show that any equity raise involving retail investors that has gone through an existing equity crowdfunding platform licensed or unlicensed platform is pumped up to the point where as this article says “retail investors to be fleeced”. This statement is not based on any facts as there is much more evidence to the contrary.
Australia only needs to have minimum operational guidelines for Australian platforms publishing equity investments with the emphasis on “publishing”. Like eBay they do not recommend, or rank, or advise … they are just publishing.
As we have seen in New Zealand good crowdfunding legislation has been ruined by licensing. Licensed platforms curate hard because they only want winners which means the hundreds of businesses that might be winners are left languishing unfunded. This is not about securities this is about start-up funding. None of these companies will be ready to list for years so viewing them through the big end of towns regulations is counter productive to the goal of funding small business.
If Government Ministers are walking their talk of “crowdfunding” funding hundreds of small businesses and creating thousands of jobs then best not spend any more time on equity crowdfunding because it wont come from licensed platforms.
The raisings on them would have been funded anyway!