Crowd-sourced funding (CSF) fintech Birchal is hoping to raise $3 million in a second campaign on its own platform.
The capital raising platform, which has been popular with brewers, medicinal cannabis ventures and impact cleaning products startup Zero Co launched in 2018 when crowd-funding was legalised, has facilitated more than 100 capital raises worth $190 million since then.
Birchal previously banked $3 million for itself in April 2022 in just over an hour to notch up the second fastest raise in local CSF history. Up Bank founder Dom Pym led the round, having been an early stage investor, tipping in an extra $1 million.
There was $2 million left on the table – a mix of 595 retail and wholesale investors who signed up during the EOI phase – so CEO and cofounder Matt Vitale is no doubt wondering that appetite remains 19 months on, setting a $2-3 million target for the new campaign, which opened for expressions of interest this week.
Certainly there’s no shortage of companies using Birchal to raise. The business typically clips the ticket for around 6% of the total, with Vitale saying the CSF platform on track to complete its busiest quarter ever, with 25 successful campaigns so far, up by around third on 12 months ago. It also dominates the year, representing 44% of the 57 successful campaigns in 2-23.
Marijuana and booze, with and without alcohol, make up the top five raises of 2023, worth nearly $16 million, with Cannaponics securing the maximum allowed under Australian CSF rules, $5 million, in May. Then size order it was Medigrowth ($3.5m) in August, non-alcoholic brand Naked Life Spirits ($3m) in July, distiller Old Young’s ($2.7m) in March; and Philter Brewing ($2.2m) in November.
Vitale said the Australian startup sector needs alternative funding solutions now more than ever.
“Our experience over the last 12 months has reinforced that our platform and our investor community is proving to be a resilient source of capital for our issuer clients, affirming our purpose and mission,” he said .
“Our community has grown over 40% in the last 12 months. Despite tough household conditions with higher interest rates and cost of living pressures, our community continues to lean-in and support their favourite businesses and brands.”
The capital is being sought to fund operations into the new year in the hope Birchal can scale CSF volumes, which sat at around $50 million annually since 2021.
For more on the EOI campaign and capital raise, see birchal.com.
Five years on, there’s been just one notable exit: Biome Australia, became the first CSF-funded company to list on the ASX (ASX: BIO) in November 2021. Two others also also looking at public listings: Line Hydrogen on the LSE; and Alta on a US exchange.
But there have also been some spectacular collapses, including GigSuper, which went belly up in late 2021 just as it was set to launch another Birchal raise.
Sushi-pizza restaurant venture Sash Global scorched its investor base just months after raising $184,000 in 2018, and women-only rideshare platform Shebah fell victim to the lockdowns after raising $3.7 million across two CSF rounds.
Perhaps the most spectacular implosion of a crowd-funded venture was neobank Xinja, which use the Equitise platform to raise more than $5 million in 2018 only to shut down two years later in late 2020 after subsequent funding failed to materialise.
Plastics waste reduction and cleaning products startup Zero Co holds the CSF record after securing $5 million in just over six hours two years ago. The startup also has VC backing from Blackbird.