Crowd-sourced funding is booming in Australia

Australian investors poured $47 million into companies through crowd-sourced funding (CSF) in the 2021 financial year – double the FY20 figure – as the sector continues to boom.

Funded!, the third annual report into Australian CSF capital raising, prepared by market leader Birchal, reveals how quickly the sector is growing, with the number of CSF offers up 40% on 12 months ago to 63 successful campaigns attracting 25,000 backers.

The $47 million is nearly half of the $100 million invested since CSF became legal in Australia in 2018.

The funding rush continued to gather pace in the final quarter of FY21, with a 620% increase in investments on 12 months earlier. The June quarter had 22 campaigns raising more than $18.7 million from more than 10,000 investors.

Birchal dominates the sector over rivals OnMarket and Equitise, raising 70% of the total funds raised ($32.9m) and facilitating 81% of all investments (20.1k). It had 45 successful CSF campaigns compared to Equitise’s 10, raising $7 million, and OnMarket’s 6, also raising $7m.

Birchal co-founder and MD Matt Vitale said the seeing funding volumes doubled in 12 months demonstrated that equity crowdfunding was the go-to capital source for Australian small businesses and startups.

“Equity crowdfunding democratises the investment process, by enabling businesses to raise investment online from their most passionate customers and fans,” he said.

“The industry is proving to be a resilient and reliable funding source for small businesses and startups, and a great way for retail investors to get exposure to a new and exciting asset class. It’s the go-to funding source for Australian early-stage businesses now,” he said.

Vitale said the new financial year is continuing the growth trend.

“Ten successful CSF offers have raised $7.8 million on Birchal in July so far, which makes us confident that the CSF regime will continue to grow in the coming financial year and beyond,” he said.

Since equity CSF launched locally three years ago, 144 Australian companies have used it, attracting 68,000 investors.

The most popular sector for investors last year was financial services, with 13 successful CSF offers raising a total of $14.7 million – nearly a third (31%) of the annual funding, followed by food and beverage, with nine successful campaigns attracting $8.7 million of investment (19%).

Just three campaigns – Thrive, $3m; Coinstash, $2.8m; and Unhedged, $2.3m – accounted for 55% of the fintech category.

And the $3 million record raise set by Shebah Rideshare in March 2019 was matched by fintech Thrive in February 2021, setting its own record by hitting the target in just three days. While for smaller amounts LITT ($1.5m) and Single Use Ain’t Sexy ($600,000) both hit their targets in just two days.

CSF funding increased in all states in FY21, but Victoria takes the crown for the most funds raised of $18.3m (39%), followed by NSW with $15m (32%)

Here are some of the highlights of CSF over the last financial year:

Top 10 CSF offers (funds raised) in FY21

You can download Funded! FY21 here.