Well the GABS Hottest 100 has been run and won for another year, and there were some tremendous results for crowd-sourced funded businesses!

Four breweries who have had successful CSF campaigns made it into the 2021 Hottest 100 with a grand total of 10 different beers!

Black Hops makes top 5 again!

Black Hops Brewing’s G.O.A.T. achieved 5th for the second year running. All in all, the team at Black Hops notched up an equal high 6 beers in the count, including ‘East Coast Haze’ (19), ‘Neverland’ (46), ‘Hop Swap’ (60), ‘Pale Ale’ (61) and ‘Hornet’ (81).

This year’s performance is sure to thrill the ‘Alpha Team’ (the Black Hops community of investors) and lovers of BH beers around the country. Black Hops was the first Australian craft brewery to complete a successful CSF offer back in 2019, raising its maximum target of $400k from 545 investors in just six days.

Black Hops are back for another round, offering their most passionate customers and fans another opportunity to join the ‘Alpha Team’. Check pout their offer page here (but always consider the offer document and general CSF risk warning before investing) — https://www.birchal.com/company/black-hops-brewing

Sobah stuns on debut with Pepperberry IPA

Indigenous-founded Sobah Beverages’ Pepperberry Indian Pale Ale debuted at 69 this year, which is incredibly impressive for a non-alcoholic beer. Sobah Beverages had a successful campaign on the Birchal platform in 2021. They raising their maximum target of $1 million from 569 investors.

Sobah Beverages make purposeful beer for social good, and are pioneers of First Nations’ entrepreneurialism, and responsible drinking, having launched Australia’s first exclusively non-alcoholic beer company. Check them out here — https://www.birchal.com/company/sobahbeverages

Dainton and Otherside round out the field

Dainton Brewery also featured in the count again, with their Blood Orange New England Indian Pale Ale, and Jungle Juice, coming in at number 38 and 84 respectively. Dainton also had a successful 2019 campaign on Birchal, raising their maximum goal of $250k from 247 investors.

And Otherside Brewery out of Perth (owned by Triple-1 Three) featured with their festival favourite ‘Anthem India Pale Ale’ (78). Triple-1 Three completed a successful CSF offer on Birchal in November 2021, raising over $1.1m from over 550 investors.

Outlook for craft beer and CSF in Australia

Despite Australian beer consumption being at a 65-year low, the variety and experimental style of craft beer is becoming increasingly popular. There are now over 600 Australian Breweries, up from 19 in the 1980s.

According to a Deloitte report, craft beer consumption is increasing at approximately 10% every year. A symbol of this increasing popularity in craft beer is GABS’ annual Craft Beer Hottest 100. A take on Triple J’s Hottest 100, GABS collects votes from Australian beer drinkers on their favourite beverage, revealing Australia’s favourite 100 craft beers.

2021 saw a significant rise in the number of successful craft beer offers in the CSF industry. Approximately $9.25 million was raised across 8 craft beer offers. Since 2018, there have been 12 successful beer-related offers under the CSF regime.

*Special thanks to Ellis Niall who helped us pull together this update.

GABS Hottest 100: CSF companies represent again in 2021! was originally published in Birchal Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

Despite the obvious challenges, there have been so many milestones achieved this year that it really should be one to remember, and not forget.

In 2021, Birchal hosted 59 successful CSF offers, raising a total of over $53m from over 30 thousand investors. A truly stunning result, representing a 165% increase on 2020.

We’ll be unpacking the CSF industry data for 2021 in our next edition of the CSF Yearbook in January (stay tuned), but have highlighted some significant milestones and achievements for Birchal in 2021 below.

Deals are getting bigger

One of the most encouraging trends we’ve observed this year is that the average deal size on Birchal has increased by 54% in 2021, to $906k. In total, Birchal hosted 20 CSF offers that raised more than $1m; and 6 that raised more than $2m.

Birchal’s top 5 CSF offers for 2021 were:

• Zero Co — $5m from over 3 thousand investors in under 7 hours (October)
• Montu — $3.5m from 1490 investors in its second CSF offer in two days (November)
• Thrive — $3m from 525 investors in three days, the equal largest and fastest at the time (February)
• Coinstash — $2.8m from over 1300 investors (April)
• Unhedged — $2.3m from 980 investors (June)

More professional investors are getting involved in CSF

A common misconception of CSF is that raising from the crowd is a lesser alternative, not interesting to professional investors, and might make a company uninvestible down the track.

This is a myth, and it’s been busted!

In February, we hosted Thrive’s successful $3m CSF offer, which reached its maximum target in just three days in a round that saw professional investors including a significant family office and several notable VCs investing alongside retail investors.

This was followed by ZeroCo’s record breaking $5m CSF offer in October, hitting its maximum (and the most allowed under CSF) in less than seven hours. An additional $6m was invested by SquarePeg on substantially the same terms as CSF investors.

We’re observing a marked increase in professional investor participation in CSF offers, and CSF funded companies. This is really encouraging, and consistent with our observations of the UK equity crowdfunding industry at a similar stage in its development.

Activated Nutrients becomes the first CSF funded company to hit the ASX (ASX: BIO)

Activated Nutrients (Biome Australia Ltd) raised over $330k on Birchal in 2019 from over 150 investors at a pre-money valuation of $6.8m.

In November, Biome became the first CSF funded company to hit the ASX, successfully completing an oversubscribed $8m IPO.

This is a significant milestone for the CSF industry, and Birchal, highlighting one of the many possibilities available for investors to realise a return from backing a business they believe in at an early stage through CSF.

Looking ahead

It’s been a challenging but rewarding year, and we’re super excited for what’s in store in 2022.

We simplify fundraising so that forward thinking businesses can build communities of engaged supporters, and get back to building the future we all want to have.

Thank you to all the businesses that trusted us to host them in 2021, the investors that backed them, and our many partners and friends for all of your support. We wish you all a safe and restful holiday season!

We’ll be taking some time to refresh and recharge over the holiday season, but back and ready for action from 10 January 2022.

If you’d like to get a head start on your fundraising journey in 2022, check out our helpful resources, and book a time to chat with us in the new year! — https://www.birchal.com/raise-investment

2021: A year to remember! was originally published in Birchal Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

The September 2021 quarter was the biggest for the industry yet, posting a 110% increase on the prior corresponding period with 24 successful CSF offers completed, raising over $19.4m from over 10 thousand investors.

100 funded deals and counting…

We also passed a significant milestone, having funded our 100th successful CSF offer with Tiller Rides on its second campaign under the CSF regime.

Unfortunately, COVID lockdowns meant we couldn’t celebrate as we’d planned to, but we’re hopeful we can make up for it when we break through $100m on the platform, which could be early next year.

The next quarter is looking bigger again, with several campaigns already funded, and several more achieving stunning results at expression of interest stage, scheduled to complete before the end of the year.

Senator Hume, Minister for Superannuation, Financial Services and the Digital Economy congratulated the Birchal team on achieving this significant milestone.

“Congratulations to Birchal on their growth and this significant milestone, another success for Australian innovation and a proud Melbourne based business.

Australia is fast becoming a digital economy powerhouse, with strong capital flows and a rapidly growing entrepreneurial community.

Innovative companies like Birchal are an example of the reforms and policy settings put in place by the Liberal Government over the last few years bearing fruit, proving jobs and opportunities for Australians.”

Platform Performance in Q1 FY22

Birchal continued its leading position in the CSF industry, completing 17 of the 24 successful offers (71% of the total); and raising $15.1m of the $19.4m raised across the board (77% of the total).

• Birchal: 17 successful CSF offers/ $15.1m total raised/ 9,080 investments
• Equitise: 4 successful CSF offers/ $2.7m total raised/ 1,145 investments
• OnMarket: 2 successful CSF offers/ $816k total raised/ 278 investments
• Fundsition: 1 successful CSF offer/ $800k total raised/ 44 investments

Birchal’s Top 10 CSF offers (funds raised) in Q1 FY22

• Medibis: $1.8m/ 932 investors
• Good Earth Dairy: $1.6m/ 856 investors
• Beer Cartel: $1.4m/ 1063 investors
• Planet Protector Packaging: $1.2m/ 854 investors
• Tiller Rides: $1.2m/ 318 investors
• KOBA Insurance: $1m/ 358 investors
• Sobah Beverages: $1m/ 569 investors
• Outland Denim: $892k/ 881 investors
• Australian Honey Ventures: $789k/ 538 investors
• Rebellion Brewing: $701k/ 475 investors

Summary of the Australian CSF industry

Since the commencement of Australia’s crowd sourced funding industry, over 168 Australian small and medium businesses have raised over $118m to fund their businesses in exchange for shares, the majority hosted on Birchal.

There are over 78 thousand investors that have participated in CSF offers. And this number is growing despite the continuing impact of COVID-19.

Equity Crowdfunding’s Biggest Quarter Ever was originally published in Birchal Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

Welcome to 2021!

We’re thrilled to be back and delighted to announce a few changes to our team.

New team members

Kellie Morton, Chief Legal Officer

Kellie joined the Birchal team as Chief Legal Officer in September 2020. Formerly Chief Legal Officer at Illion, Kellie joins with a wealth of capital markets and private equity experience gained in New York, London and as a partner at a leading Australian law firm.

Connect with Kellie on LinkedIn

Ashwin Ramachandran, Campaign Manager

Ashwin joined the Campaign Management Team in November 2020. Ashwin has spent the last ten years across six countries, and joins Birchal with a background in Strategy & Operations, specialising in Customer Strategy and Operations Transformation. Alongside running his side hustle ēthikos, Ashwin is already making a massive contribution to Birchal’s campaign management team, prospecting startups across Australia and enabling successful equity crowdfunding investment campaigns.

Connect with Ashwin on LinkedIn

Promotions

Robin Holt, Head of Campaign Management

We are delighted to announce the promotion of Robin Holt to Head of Campaign Management. Robin joined Birchal in September 2018 from Crowdcube in the UK, bringing with him a wealth of experience and insights from the UK equity crowdfunding industry. Robin has made a tremendous contribution to the Birchal team, and the Australian equity crowdfunding industry more broadly.

Connect with Robin on Linkedin

Claire Brown, Senior Campaign and Success Manager

We are delighted to announce that Claire Brown has been promoted to the role of Senior Campaign Manager and Success. Claire joined Birchal in May 2019 and has made an enormous contribution to the Birchal team and our clients. In addition to Claire’s key role in the Campaign Management Team, Claire also works with Birchal’s funded companies to help them on their journey post-raise.

Connect with Claire on LinkedIn

Birchal — Team Update was originally published in Birchal Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

Summary of the Australian CSF industry in 2020

Since commencement of Australia’s CSF industry in 2018, 118 Australian SMEs have collectively raised over $75 million by issuing shares from their most passionate customers and fans online.

There are now over 55 thousand investors that have participated in CSF offers, and this number has continued to grow despite the impacts of COVID-19.

In 2020, 49 successful CSF offers were completed (approximately the same as in 2019), with a total of approximately $30 million raised (slightly down on 2019’s total of $31m).

2020 was a tale of two halves. Escalation of the COVID-19 pandemic saw activity decrease by approximately 54% in the first half of 2020, compared to the same period in 2019.

Notably, Birchal was the only active platform from escalation of the COVID-19 pandemic in March through to July, closing 11 of its 35 successful offers for 2020 during this period.

The industry has achieved a strong rebound in the second half of 2020, with activity increasing approximately 30% compared to the same period in 2019. The final quarter of 2020 will be the biggest for the CSF industry yet, with over $13 million raised across more than 22 successful campaigns.

Platform performance

Activity in the Australian CSF industry has continued to consolidate during 2020 towards the major platforms: Birchal, OnMarket and Equitise.

Birchal was the clear leader, finishing the year having hosted 70% of all successful deals (35 in total), and raising approximately 68% of all funds raised (over $20 million) across the CSF industry in 2020.

For Birchal, despite the challenges 2020 has been a strong year, posting a 20% increase in funded CSF offers, and a 12% increase in transaction volume for the full calendar year. Excluding the three months to 31 March 2020 (i.e. the “COVID quarter”), Birchal achieved a 36% increase in funded deals, and a 30% increase in transaction volume against the same period in 2019.

Female founders in focus

Approximately 25% of the businesses that used the CSF regime to raise capital in 2020 were founded (or co-founded) by females.

Birchal observes that Female founded businesses raise around 25% more in their CSF campaigns, and over three times as many investors, than businesses that don’t have a female founder or co-founder.

It is common ground that females are underrepresented among startup founders, and venture-backed companies. It has been estimated that female founders get less than 5% of the total venture capital money that’s deployed globally.

Because equity crowdfunding enables founders to side step the old guard, and raise funds from their most passionate customers and fans, it is little wonder that female founders, and the investors that back them, are increasingly finding their voice.

Popular industries in 2020

• Health Care was the most invested in industry in 2020, with 8 successful campaigns raising a total of $7.14 million (or 25% of the industry). The majority of these campaigns were for medicinal cannabis businesses, three of them raising over $1 million: (Cannatrek, $2.5 million; Montu, $2 million; and Compass Lifestyle Clinics, $1.3 million).
• Food & Beverage was the second most invested in industry in 2020, with 8 successful campaigns raising a total of $6.45 million. All but one of these campaigns were hosted by Birchal, and two of them raised over $1 million: (Bunsters, $2 million; Whole Kids, $1.2 million).
• Sustainability and Financial Services were the next most invested in industries, raising a total of $4.35 million and $4.36 million respectively.

CSF activity by company stage in 2020

• Growth Businesses (with greater than $1 million in revenue) raised the most investment under the CSF regime, with approximately $9.3 million raised across eight successful CSF campaigns (31% of the total). The median amount raised for Growth Businesses was approximately $971 thousand.
• Pre Revenue Businesses completed the greatest number of CSF campaigns, with 21 successful campaigns (42% of the total) raising approximately $7.5 million. The median raise for Pre Revenue Businesses was approximately $327 thousand.

Download the report

You can download the CSF Yearbook 2020 here

We’re really excited about what lies ahead for equity crowdfunding in 2021.

Be part of this next chapter. The landscape of capital raising in Australia is rapidly developing and more companies are connecting with their customers to turn them into invested, brand ambassadors.

To find out more behind the data in this report, reach out to our team at Birchal — the platform that connects great Australian brands with the investors that love them. Email us at — raise@birchal.com

CSF Yearbook 2020 was originally published in Birchal Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

Buy the book here — http://cultstatus.com/

Tim Duggan, co-founder of Junkee Media takes a deep dive into the elements of Cult Status, and analyses some of the great businesses and projects that have achieved it.

What is Cult Status exactly? For Duggan, it’s a business or project with a dedicated community around it who strongly identify with its purpose.

Although I imagine much of the research and writing for this book was completed before COVID, in this case, Duggan’s analysis of Cult Status and the businesses that have it has become even more insightful, and useful.

One interesting trend that emerged during the pandemic was that the more cult status a business had, the better its ability to survive through the tough times. This didn’t help if it was an industry that legally had to shut its doors, but for entrepreneurs that could shapeshift into new areas they were able to lean on the goodwill they’d amassed over years with their customers.

Duggan observed among the new breed of companies emerging today, that those who have achieved cult status general share several things in common. He has distilled from these observations seven steps that will give businesses aspiring to cult status the best chance of achieving it.

Each step is given a chapter, with anecdotes and interviews with founders, including James Bartle of Outland Denim (which recently funded on Birchal).

At the end of each chapter, is a section called ‘In Real Life’ which includes exercises for readers to complete and implement in their business or project.

I thoroughly enjoyed reading ‘Cult Status’ and strongly recommend it. Of particular relevance to the companies we host on Birchal, and the work we do is Step 6 of the book ‘Lead From the Middle’.

Duggan writes:

Every business with cult status has a strong and passionate community around it. They are usually drawn to a unifying message everyone buys into, or that forms naturally around a charismatic founder or group that makes them feel welcome. Where previous generations taught us we should lead from the front, or by observing from behind, these businesses lead from the middle. They’re walking alongside the community they’ve built, empowering them to choose the direction to head in and what speed to go at. Modern leaders are guided by those around them as much as they lead them.

This particularly resonated with me. As I see it, any crowdfunded business is supremely positioned to ‘lead from the middle’. Founders tell us they are often surprised and delighted by how enthusiastic and helpful investors can be, and what sets equity crowdfunding apart from other funding methods.

We often tell companies that they should think of their shareholder group as an asset, as an engaged and happy shareholder group can provide a company with a pool of liquidity to draw on for future funding rounds, brutally honest (but constructive) feedback and product insights, and fiercely passionate advocacy which can be particularly useful in a crisis (or pandemic).

This is what we think all crowdfunded businesses should be striving for, and Duggan has done a tremendous job of illustrating the prize that awaits them: Cult Status.

Buy the book here — http://cultstatus.com/

Book review: Cult Status by Tim Duggan was originally published in Birchal Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

Birchal’s first CSF rights issue for Adviser Ratings has been an inspiring example of how valuable a group of engaged investors can be for a business in times like these.

A “rights issue” is an offer to all existing shareholders to subscribe for additional securities in the company, usually in proportion to their holdings, and usually at a discount to the current market price of the shares.

Adviser Ratings is, like many businesses, gathering the financial resources it needs to seize the opportunities ahead, on the other side of this crisis.

Angus Woods, founder and CEO of Adviser Ratings, approached us a few weeks ago with an idea to offer a 20% discount to his existing shareholders, many having invested in Adviser Ratings’ $1.1m raise last year.

Around $350k was raised from CSF and non-CSF investors in nine days. The offer was open to Adviser Ratings’ non-CSF and CSF investors first for 48 hours, with around $250k raised. Once existing investors were given the opportunity to invest, the offer was made public, but for a short time (just 7 days).

An ASX strategy applied to CSF

Just like during the GFC, rights issues and placements have been a popular mechanism for ASX listed companies to raise capital from existing shareholders.

ASIC Commissioner John Price recently said that the ability to tap equity markets in a time of stress was a vital aspect of Australia’s financial system.

Since March 2020, approximately $18 billion has been raised by ASX listed companies through secondary share issues including placements and entitlement offers like rights issues. The average discount being 19 per cent and 29 per cent respectively.

Tony Boyd recently observed that apart from beating rival exchanges in London and New York by a considerable margin in terms of the absolute amount of capital raised, the ASX has raised much more capital as a proportion of total market capitalisation compared with its peers

Australia’s equity capital market stands out because of the speed with which a rights issue, placement or accelerated book-build can occur. — AFR

This is no surprise, as the strong performance of the ASX during the GFC helped keep Australia’s economy out of recession. Over $90 billion was raised through secondary market issues in 2008 and 2009.

The ability of companies to rapidly and flexibly tap public equity capital markets (largely from institutional funding sources) during the worst of the GFC, when equity values were sharply reducing, also played an important role, particularly for large companies in some of the most vulnerable sectors. — ASX

Demonstrating the “real” value of a company’s share register

In guiding companies through a capital raising process, at Birchal we often say that an offer should achieve two things:

• delivering the capital you need to execute your plans; and
• establishing a pool of liquidity the company may call on into the future.

Adviser Ratings is an excellent example of this, as they’ve shown that even in times of economic uncertainty, their investors will back them to keep moving forward.

Under the CSF regime, companies can now execute sophisticated fundraising strategies, previously the domain of only ASX-listed companies, in critical times like we are experiencing now.

We’re thrilled to have hosted Adviser Ratings on Birchal for the second time now, and congratulate the Adviser Ratings team, and their investors, on an excellent campaign in difficult times.

To find out more, contact matt@birchal.com

Introducing the CSF Rights Issue was originally published in Birchal Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

A Tale of Two Crises

The PM has said we’re fighting two crises. A health crisis, and an economic crisis. Each perhaps as devastating as the other.

Like in times of war, it has been inspirational witnessing Australian businesses and industries re-tool to meet the needs of the health crisis. Craft brewers and distillers re-tooling to make hand sanitiser. Manufacturers re-tooling to make personal protective equipment. Stood-down airline workers re-deployed to stack shelves at supermarkets.

Phase one of the Government’s plan to manage the economic crisis is underway. The Government, which has already provided $240 billion in stimulus measures, income support and health measures, knows the finances are finite and there is very little left to spend.

Phase two of the plan is to fire up the engines on the other side of this crisis, snapping the economy back to what it was like before, while also carrying the burden of the intense expenditure that was needed for our national hibernation phase.

Having fired almost all its bullets with the largest stimulus package in history, the Government will need to use a range of other levers to help stimulate the economy.

We think a similar level of innovative re-tooling used to fight the health crisis is needed to fight the economic crisis and facilitate our emergence from economic hibernation. And we think this can be done by enlisting a mum and dad’s army of venture capitalists.

A Mum and Dad’s Army of VCs

Until now, Australia has been a nation of predominantly risk-averse and unimaginative investors. Property, banks and blue chip mining stocks have been the favoured dishes at Australia’s 29-year feast of economic growth. If we are to continue to prosper as a nation, we need to expand our palate, and our appetite for risk.

Value will be created by the companies that find solutions to the unprecedented challenges the world is facing. Many of the most valuable companies of 2030 have not been created yet…perhaps not even thought of. People will create them. People will fund them. We say, let that be us.

The countries that thrive in this decade will have economies that support innovation with thriving startup ecosystems — Australia has a bit of catching up to do. We can never replicate the successful startup ecosystems of Silicon Valley, or Tel Aviv. And nor should we aspire to. We need to build a uniquely Australian response, that leverages our strengths and compensates for our weaknesses.

Australia has one of the most educated workforces in the world, facilitated by world-class universities, institutions where other countries send their best and brightest to be educated. But we’ve been terrible at funding early stage ventures. We need to get better, fast.

Australia’s crowd-sourced funding regime has demonstrated that it can deliver fast and efficient capital to Australia’s small and medium businesses, from retail investors prepared to back them. Now having built the infrastructure and seen its potential, our Government should now encourage further growth by empowering an army of mum and dad investors to back Australian businesses into the recovery.

Can this be done? We think in three ways:

1. Encourage investment into small and medium businesses

An effective way the Government can encourage investment into small and medium businesses is by improving the Early Stage Innovation Company (ESIC) regime.

ESIC is under utilised.

We propose that the “innovation” and “early stage” eligibility tests are removed and replaced with the eligibility criteria currently in place for the CSF regime.

This will have an immediate impact on utilisation of the ESIC regime by companies and investors.

Private investment must be encouraged.

We propose that the carry-forward tax offset for ESIC investors be increased from 20% to at least 50% of the amount paid for qualifying investments, to encourage investment into ESICs.

2. Unlock additional funding sources for small and medium businesses

Although still in its infancy, the crowd sourced funding (CSF) regime has shown it can effectively deliver fast and efficient equity capital to small and medium businesses. We think it’s time for the CSF regime to be expanded to facilitate debt capital offers now too, like big business can.

Companies should be permitted to offer debentures under the CSF regime. This will unlock a valuable additional source of debt capital for small businesses who have historically been unable to access unsecured finance from lenders.

Our preliminary analysis suggests that the changes needed to expand the CSF regime to include debentures could be achieved quickly through regulation, without the need for additional legislation.

3. Make this asset class more attractive by making it easier to sell shares

Private company shares will be more attractive as an asset class if there is an organised mechanism for investors to sell their shares.

A persistent concern among CSF investors is the limited ability or inability to sell or transfer CSF shares acquired under a CSF offer — in contrast to shares listed on a market like ASX that are typically able to be traded easily.

Birchal has shown how the the Corporations (Low Volume Financial Markets) Instrument 2016/888 (the Instrument) might be used to achieve this.

But a low volume market can only facilitate within a 12 month period:

• no more than 100 transactions, and
• no more than $1.5 million in aggregate value.

With the advent of the CSF regime, it is now possible for proprietary limited companies to have a potentially unlimited number of shareholders.

We think the Instrument, which predated the CSF regime, should now be amended to significantly increase the number of transactions that may be facilitated under a low volume market.

Now is the time to start to leverage the full capacity of Australia’s crowd-sourced funding regime so it can deliver fast and efficient capital to Australia’s small and medium businesses, and make this tale a better one for the telling.

Enlisting a Mum and Dad’s Army of Venture Capitalists was originally published in Birchal Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

This is a tremendous result, despite the growing impact from the COVID-19 pandemic.

Seabin CEO Pete Ceglinski recently told The Australian:

“We started to get extremely worried that the campaign would be a disaster due to the crisis and its effect on trading,”

“Our strategy for a crowdsourced funding campaign was to have between 1500 to 3000 investors as we knew our start-up is not really the right fit more the more conventional venture capital investors.”

How did this compare to the CSF industry across Australia?

Approximately $4m was raised across all Australian CSF platforms in Q3. Seabin Project was the star performer of the most recent quarter, raising $1.8m from around 1,800 investors.

Did COVID-19 impact the raise?

Close to $500k was raised in the last week of the Seabin Project Campaign (when the COVID-19 pandemic began to escalate in Australia), which is inspiring in the current environment, demonstrating that investors are still prepared to back businesses into the recovery.

Ceglinski told The Australian the successful raise was outstanding, particularly given the current circumstances.

“As the stock market bounced around, our high net worth contacts ceased trading due to uncertainties. This meant that no large investments came on board, and we have continued on a slow yet steady rise from smaller and mainly first time investors looking for both purpose and ROI”

Capping of strong performance in the financial year to date

Birchal has extended its lead as Australia’s most successful crowdfunding platform, after Seabin’s recent success.

Seabin’s offer brings Birchal’s total funds raised to just over $14m for the 2019/20 financial year to date (accounting for 67% of the industry). This represents a 100% increase on the total funds raised by Birchal in the 2018/19 financial year ($7.4m), with Q4 yet to be completed.

Read Birchal’s Q3 update here.

Opportunities and challenges still ahead

Although the immediate outlook is challenging, as the full impact of the COVID-19 pandemic, and the effectiveness of Government stimulus measures remains to be seen, opportunities lie ahead.

Read our Blog Post on stimulus announcements as at 31 March 2020 here.

The businesses that emerge on the other side of this crisis will drive Australia’s economic recovery, and be assisted by an unprecedented level of economic stimulus. This presents enormous opportunities for investors that have available cash and capital to invest.

Birchal is calling for extra stimulus in the form of an expansion to the Early Stage Innovation Company (ESIC) tax incentives, which would immediately improve the CSF regime’s ability to deliver capital to early-stage businesses.

Read the full interview with David Swan in The Australian here.

Seabin raises $1.8m: Biggest deal of 2020 was originally published in Birchal Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

In response the the unprecedented COVID-19 Pandemic, Federal, State and Territory governments are implementing a range of stimulus measures to assist small and medium sized Australian businesses adapt to the rapidly changing economic conditions.

Below is a high level summary of some of the key measures that have been announced as at 31 March 2020, with links to relevant Government websites where you can view more detailed official information.

Federal Government Stimulus Announcements — The 8 We Know of So Far

1/8 — The Job Keeper Package (wage subsidy)

Under the JobKeeper Payment, businesses impacted by the Coronavirus will be able to access a subsidy from the Government to continue paying their employees.

Affected employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum period of 6 months.

Keep in mind:

• A business (with turnover less than $1 billion) must show that its turnover will be reduced by more than 30% to be eligible for this relief — more detail on how this will work in practice is needed. On the current information, it seems that most early stage startups, which are predominantly pre-revenue or high growth, may be kept out. Hopefully this is an oversight and can be fixed!
• For businesses with a turnover greater than $1 billion, they will need to show a 50% reduction.
• Temporary residents do not seem to be eligible for this relief.

Information for Employers here

Information for Employees here

2/8 — Boosting cash flow for employers

The Government will provide tax-free cash flow boosts of between $20,000 and $100,000 to eligible businesses, delivered through credits in the activity statement system when eligible businesses lodge their activity statements.

Am I eligible?

Small and medium-sized business entities with aggregated annual turnover under $50 million who employ workers are eligible. NFPs (including charities) with aggregated annual turnover under $50 million that employ workers are also eligible.

Keep in mind:

• As this relief is delivered through credits in the tax system, it seems that the credits will be applied to outstanding tax debts first, only improving the cash position of a business if it becomes eligible to a refund after the credit.

More information here

3/8 — Temporary relief for financially distressed businesses

The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and to initiate bankrupt proceedings against an individual, as well as temporarily increasing the time companies and individuals have to respond to statutory demands they receive.

The package also includes temporary relief for directors from any personal liability for trading while insolvent, and providing temporary flexibility in the Corporations Act 2001 to provide targeted relief from provisions of the Act to deal with unforeseen events that arise as a result of the Coronavirus health crisis.

Keep in mind:

• A company’s insolvency could give rise to a range of other events and liabilities, besides the liability that attaches to directors when a company trades while it is insolvent. For example, regulated businesses like AFS licensees.

More information here

4/8 — Increasing the instant asset write-off

The Government is increasing the instant asset write-off threshold from $30,000 to $150,000, and expanding access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.

In 2017–18 there were more than 360,000 businesses that benefited from the current instant asset write-off, claiming deductions to the value of over $4 billion. This measure will support over 3.5 million businesses (over 99 per cent of businesses) employing more than 9.7 million employees.

More information here

5/8 — Backing business investment

The Government is introducing a time-limited 15 month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions.

Am I eligible?

Businesses with a turnover of less than $500 million will be able to deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost. This measure will support business investment and is estimated to lower taxes paid by Australian businesses by $6.7 billion over the next two years. This measure will support over 3.5 million businesses (over 99 per cent of businesses) who collectively employee more than 9.7 million people.

More information here

6/8 — Supporting apprentices and trainees

The Government is supporting small business to retain their apprentices and trainees. Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).

Support will also be provided to the National Apprentice Employment Network, the peak national body representing Group Training Organisations, to co-ordinate the re-employment of displaced apprentices and trainees throughout their network of host employers across Australia.

More information here

7/8 — Support for Coronavirus-affected regions and communities

The Government will set aside $1 billion to support regions most significantly affected by the Coronavirus outbreak. These funds will be available to assist during the outbreak and the recovery. In addition, the Government is assisting our airline industry by providing relief from a number of taxes and Government charges estimated to total up to $715 million.

More information here

8/8 — Supporting the flow of credit

The Government, the Reserve Bank of Australia and the Australian Prudential Regulatory Authority have taken coordinated action to ensure the flow of credit in the Australian economy. Timely access to credit is vital for businesses to manage the impacts of the Coronavirus.

• Support for immediate cash flow needs for SMEs — Under the Coronavirus SME Guarantee Scheme, the Government will provide a guarantee of 50 per cent to SME lenders to support new short-term unsecured loans to SMEs. The Scheme will guarantee up to $40 billion of new lending. This will provide businesses with funding to meet cash flow needs, by further enhancing lenders’ willingness and ability to provide credit.
• Quick and efficient access to credit for small business — The Government is cutting red tape by providing a temporary exemption from responsible lending obligations for lenders providing credit to existing small business customers. This reform will help small businesses get access to credit quickly and efficiently.
• Reserve Bank of Australia — Supporting the flow and reducing the cost of credit — The RBA announced a term funding facility for the banking system. Banks will have access to at least $90 billion in funding at a fixed interest rate of 0.25 per cent. This will reinforce the benefits of a lower cash rate by reducing funding costs for banks, which in turn will help reduce interest rates for borrowers. To encourage lending to businesses, the facility offers additional low-cost funding to banks if they expand their business lending, with particular incentives applying to new loans to SMEs.
• Support for Non-ADI and smaller ADI lenders in the securitisation market — The Government is providing the Australian Office of Financial Management (AOFM) with $15 billion to invest in structured finance markets used by smaller lenders, including non-Authorised Deposit-Taking Institutions (non-ADI) and smaller Authorised Deposit-Taking Institutions (ADI). This support will be provided by making direct investments in primary market securitisations by these lenders and in warehouse facilities.
• Australian Prudential Regulatory Authority — Ensuring banks are well placed to lend — The Australian Prudential Regulatory Authority has announced temporary changes to its expectations regarding bank capital ratios. The changes will support banks’ lending to customers, particularly if they wish to take advantage of the new facility being offered by the RBA.

State and Territory Government Stimulus Announcements

Victoria

The Victorian Government has established an economic survival package to support Victorian businesses and workers through the devastating impacts of the COVID-19 pandemic.

The $1.7 billion Economic Survival Package complements the work of the Federal Government, and includes key programs including a Payroll Tax refund, waiving of liquor licence fees, establishment of relief funds for affected businesses and workers and other measures.

More information here.

New South Wales

On 27 March 2020, the NSW Government today released the second stage of its economic package aimed at keeping people in jobs, helping businesses and supporting our most vulnerable in the face of the COVID-19 pandemic.

The NSW Government’s stimulus package includes a range of key programs including a $1bn Working for NSW Fund and deferral of a range of State taxes including Payroll and gaming taxes.

More information here.

Western Australia

The WA State Government announced a $607 million stimulus package to support WA households, pensioners and small businesses in the wake of COVID-19. The package includes a one-ff grant of $17,500 for businesses with a payroll between $1 million and $4 million, adjustment to the payroll tax threshold, and deferral of payroll tax payments on application.

More information here.

Queensland

The Queensland Government has announced a range of initiatives to
support businesses affected by COVID-19. The initiatives are designed
to help businesses of all sizes withstand the economic impacts of the
pandemic and support jobs.

The Queensland Government’s package includes immediate two-month Payroll Tax refunds for COVID-19 affected businesses. Businesses can also apply for a three-month payroll tax holiday, and deferral of future payroll tax obligations for the rest of 2020. The relief also includes a $1bn industry support package, an interest free loan program, and funding for worker retraining and assistance.

More information here.

We’re aiming to keep abreast of updates as they come through. Stay tuned for more information, follow us on Facebook or sign up to our newsletter to learn of new measures when we do.

COVID-19: Business Relief & Stimulus Measures For Your Business was originally published in Birchal Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.