Eco Innovator November 2011


Crowdfunding for Capital Raising

The Australian Small Scale Offering Board (ASSOB) is holding a seminar series on ‘crowdfunding' as a way to raise capital.

‘Crowdfund investing' (CFI) is raising capital, especially early stage capital, through investors who are 1, 2, or 3 degrees out from the company, says ASSOB chief executive, Paul Niederer.

These contacts can be a lot of people. While the initial crowdfunding investors may be friends, family and followers, if you are on Linkedin then 3 degrees represents millions of people, he says.

However, unlike donating and lending, crowdfunding is "investing" and heavily regulated as it falls under securities regulations.

"The amount people invest in a crowdfunding campaign seems to average around $50 to $100. This means that if you want to raise between $100,000 to say $2 million you have to gather a lot of followers at these investment levels ($100,000 equals maybe 1500 investors and $2 million equals maybe 30,000 investors.)," he said.

The smaller amount means you have to put a lot of time into publicity and promotion, which may not be worth it. That is also a lot of people to issue and read a capital raising document, and a lot of shareholders to register and keep informed.

Other issues are whether the entrepreneur has the skills to communicate to prospective investors, widening the crowd to match the capital raising and funding expectations, clearly communicating the risks, and possibly giving away too much information and not protecting the company's IP.

"So while you may envy the successes people are having on Kickstarter, Pozible,, IndieGoGo, and, you need to consider the points above to see if it is for you," he says.

ASSOB is a CrowdFund Investor platform that has raised $130 million for unlisted companies and has around 60 companies in various stages of raising capital.

Mr Niederer is presenting a seminar on crowdfunding in Brisbane on 8 November, Sydney 10 November, Adelaide 16 November, Melbourne 17 November, and Perth 24 November. The event is for companies that need to raise under $100,000.

Among other topics it will cover harnessing internet technology to approach customers and extending personal or social media networks for financing.

A complementary seminar held on the same day in each city is on "How to Raise the Capital You Need to Grow Your Business". This is for companies that need to raise over $300,000.

ASSOB is a successful capital raising platform with access to private, high net worth and sophisticated investors. About 60 individual investors invest in new ASSOB companies each month, several of which are cleantech companies.






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