Crowd Sourced Funding Equity Raising Report Card June 2019

Accountant's Minute 194

Happy New Financial Year!

36 companies have raised $31.6 million as Crowd Sourced Funding Equity Raising Companies.

This augers well for a great capital raising performance during 2019/ 20.  The momentum certainly increased after 19 October 2018 when proprietary limited companies were able to raise Crowd Sourced Funding Equity Raising Capital direct from the public without having to upgrade to an unlisted public company.

There has been great activity including:

  • A $5 million capital raise by a 100% digital ban
  • A $ 4.2 million raise for mining exploration in Greenland
  • A $3 million single tranche raised by an all - female rideshare business in Melbourne

At the other end of the spectrum there were successful capital raises undertaken by companies who were seeking $300,000 - $400,000.

All of this activity has set the scene for launching Crowd Sourced Funding Equity Raising into 2019/2020!

One significant group that I believe we will hear a lot more about during the next twelve months is companies who are undertaking a “scaling up” process.

Companies undertaking a “scaling up process” are fast growing on a planned basis implementing the keys to scaling up:

  • Attracting and keeping the right “people”;
  • Creating a truly differentiated “strategy”;
  • Driving flawless “execution”; and
  • Having plenty of “CASH” to weather the storms.

Andrew Geddes who was chair of Greencross Limited (a former ASX top 200 company) for 11 years believes Crowd Sourced Funding Equity Raising will emerge as a key contributor in supplying the “cash” that companies wishing to “scale up” require.

Crowd Sourced Funding Equity Raising is a great alternative to borrowing from banks – there is no security required – there are no personal guarantees required – there is no monthly repayments of principal and interest to be made.

Companies need a clear documentation of their:

  • Strategic initiatives
  • Focus
  • Values
  • Budgets and Cash Flow Forecasts
  • Customer analysis
  • Business Plan
  • Business valuation to determine the number of shares and the price for the shares to be issued

As part of the development of the Crowd Sourced Funding Offer Document, all of this documentation is required.

Accountants who are committed to supplying a range of “Business Improvement Services” will be able to supply the superior consulting services that their clients require to successfully raise capital for their businesses.

This type of work will assist accountants to create “new income streams” for their firms and at the same time offer their accounting team members interesting and varied work.  This is the sort of diversified activity that Deloitte suggested accountants should develop as part of an accountancy firm’s response to “digital disruption”.

You could start this process by identifying which of your clients meet the specifications to be a Crowd Sourced Funding Equity Raising Company:

  • Group turnover under $25 million per annum
  • Group gross assets under $25 million
  • No member listed on a stock exchange

The companies will undoubtedly have other characteristics which could include:

  • a CEO with a “big audacious idea”
  • A vision to grow or acquire other businesses
  • Undertaking a “scaling up process” - has a clear understanding of the need for cash to fund a company in the growing up phase
  • Has developed new products processes or services but is too old (over 3 years of age) or too big (income over $200,000, expenditure over $1 million) to be classified as an Early Stage Innovation Company that needs to raise capital to be able to commercialise the new technology that it has developed.

When you have identified the clients who you think may have some interest in Crowd Sourced Funding Equity Raising invite them to a seminar or webinar where you could present a summary of the Crowd Sourced Funding Equity Raising process and then enquire whether they are interested in receiving a proposal from you. (Incidentally, I think you will find that the vast majority of companies who are seeking to raise Crowd Sourced Funding Equity Raising will currently be the clients of small and medium sized accountants situated all over Australia.)

From your client’s point of view, going through this rigorous process with you as their “Trusted Advisor” can help clarify whether their company is ready to start raising capital or whether there is still some work to be done.

I think it’s really important for accountants and their clients to fully understand the pros and cons of Crowd Sourced Funding, and the best way to do that is to begin with research.” – Andrew Geddes

“The ESS BIZTOOLS’ website contains a lot of information and it is a good place to get started”. – Andrew Geddes

Free Webinar

I look forward to your participation in our first FREE webinar for 2019/2020 “Crowd Sourced Funding Equity Raising Report Card June 2019 on Thursday, 4 July 2019 at 12:00 noon AEST.  To register please click here.

If you have any question on any aspect of the services provided by ESS BIZTOOLS, please do not hesitate to contact us.

Have a great day!

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