Frequently Asked Questions
+ok, what is crowdfunding?
Crowdfunding is a way of raising money from a large number of people for a project, product or business, typically done via the interweb.
Crowdfunding capitalises on the accessibility and reach of the digital space – in particular social media networks - to get the word out about the idea, cause, project or business.
Rather than reinvent the wheel, The Crowdfunding Bible has an excellent review of the pros and cons of crowdfunding and traditional investment for your reading pleasure. See bottom of page.
+what is crowd sourced equity funding (CSEF)?
Also called equity crowdfunding. Oh, and investing crowdfunding. But we’ll call it CSEF.
CSEF is crowdfunding, but instead of offering rewards, it's the offer of shares in the company.
The company decides how much they need to meet their business goals and how much equity they’re willing to exchange. In return, the investor becomes a shareholder in the company and receives a pro-rata share of the company as a percentage of how much they put in of the total capital raised. Similar to any other capital raise in traditional investment markets but with the potential to bypass many of the hurdles, costs and gatekeepers of investment banks, angels and VCs.
+why invest via equity crowdfunding?
Access. Most likely, if the business provides an easily accessible product, that will be fine. Sure, crowdfunding in Oculus Rift may have earned millions for subscribers/investors rather than (or perhaps as well as) a headset, but alas.
There are also businesses out there that are quite inventive that cannot offer products under the rewards based crowdfunding platforms. Facebook and Google for instance would have provided you, what exactly, under a rewards based crowdfunding platform? There are many more businesses that will become successful that don't just offer products or rewards to pledges.
This is the opportunity to invest in Australia’s leading start up businesses.
+csef in australia?
Crowdfunding for rewards and donations are fine in Australia. But when you offer shares in a company, well, that becomes more problematic as it comes under the Corporations Act and its regulatory body, ASIC.
The Australian Government is finalising legislation to enable equity crowdfunding in Australia, and we expect the first crowdfunding campaigns to begin in the September quarter 2016.
+what does crowdready do?
CrowdReady is an Australian-based start-up that assists entrepreneurs, platforms and investors navigate the burgeoning world of CSEF. Unlike rewards and donation-based crowdfunding, CSEF will be subject to stringent controls under the legislative and regulatory environment. This is where CrowdReady steps in. CrowdReady principals' backgrounds include venture capital, IT and law and can advise on all matters related to CSEF for investors, entrepreneurs and platforms.
+why do i need crowdready?
For Entrepreneurs: you will need guidance throughout the equity crowdfunding process. From structuring your business appropriately, constituent documents, understanding the capital raising process (in general and specifically relating to CSEF), due diligence, financial models, business plans, investor decks, campaigns, business valuations and government grants. CrowdReady has been there and done that.
For Investors: CrowdReady is your conduit. We will provide you with education through dispensing our knowledge and experience in venture capital, investment, dilution, opportunities and the associated risks. We will also conduct high level due diligence on the entrepreneurs behind the business as we want you to make educated investments and ensure that successful investing in start ups becomes the domain of the smart rather than just the rich.
+how is crowdready paid?
Open to suggestions here... I guess that makes us truly independent. You can read the articles on the website without wondering about bias. We just want a flourishing crowd sourced equity funding industry in Australia.
+how do i develop a winning crowdfunding campaign?
There is a wealth of information out there with tips and strategies for winning campaigns. Aside from our profiles of what makes a successful campaign on this site, we’ve found these links to be particularly useful:
CAMAC - Corporations and Markets Advisory Commission (report on CSEF in Australia)
Corporations Act - legislation regarding Australian companies
CSEF - crowd sourced equity funding
Intermediaries - crowdfunding internet platforms
Investors - umm, investors
Issuers - the Entrepreneur's business