Accountant's Minute 192
Prepared from an interview with Andrew Geddes, Public Company Director, Consultant to Accountants and businesses wishing to “Scale Up” included within the webinar “All Female Business Very Popular”. Click here to view the webinar.
Crowd Sourced Funding: Knowledge is the Key:
The former Chairman of Greencross Limited and Accountancy Industry Consultant, Andrew Geddes, believes Australia’s accountants and business advisors are not doing enough to stay abreast of new financial developments that could greatly benefit their clients.
Mr Geddes says most accountants should be spending up to 30% of their time educating themselves and extending their professional development which they could achieve by attending the “Scaling Up Masterclass”
“One of the most important changes recently legalised in Australia is Crowd Sourced Funding Equity Raising” says Mr Geddes.
He claims “very few accountants even know what Crowd Sourced Funding is, let alone how it could help their clients to grow”.
“Small and medium companies often rely on their accountant’s advice to keep them competitive” Mr Geddes says, “yet, many accountants just keep doing what they’ve always done; sending clients off to the big banks or angel investors, where the cost they have to pay for growth capital can be crippling”.
He believes the advent of Crowd Sourced Funding Equity Raising in Australia could be the answer to the capital-raising needs of many accountants’ small and medium sized clients, but believes accountants must thoroughly learn about the process first to give informed advice.
“A good source of knowledge is the website of accountancy information-provider ESS BIZTOOLS” says Mr Geddes. That website is www.essbiztools.com.au.
Finally legalised in October last year, Crowd Sourced Funding Equity Raising allows qualifying SMEs to raise up to $5-million of capital each year under an ASIC-regulated process.
So far, in just seven months, 36 companies have raised $28.9-million through the new process.
“Crowd Sourced Funding could prevent many companies in the small business sector from making a big mistake by prematurely launching an IPO. Instead, Crowd Sourced Funding could allow those SME companies to stay in private hands and still raise the capital they need for growth” Mr Geddes says. “Once they have achieved that growth, they may well decide to go public, but Crowd Sourced Funding could help buy them time they need to get themselves ready”.
Mr Geddes sees the share market as being fraught with danger for many of the smaller listed companies.
A number of small companies have dropped off the share market in the past year and have had to be re-privatised, often because of the stringent operating conditions within the public arena.
“Preparing an IPO can cost around $1-million” he says, “but a Crowd Sourced Funding Offer is far less expensive, around $100k, and may achieve the same objective without the ongoing scrutiny of institutional investors, proxy advisors and shareholders, who constantly pressure listed companies”.
Mr Geddes is a strong supporter of Crowd Sourced Funding Equity Raising and believes, with the support of accountants and advisors, it could well become the preferred funding option for many of Australia’s small and medium sized businesses.
If you have any question on any aspect of the services provided by ESS BIZTOOLS, please do not hesitate to contact us.
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Episode 192 - Crowd Sourced Funding – Knowledge is the Key
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