Slow reform could stifle Australian start-ups

3 oCT IMAGEAustralia is at risk of falling behind the rest of world should reform governing equity crowdfunding be delayed.

Reports that the Crowd Sourced Equity Funding (CSEF) scheme may not come into play until 2015 or 2016, places Australia at risk of becoming one of the last developed markets in the world to support equity crowdfunding. This could lead to more businesses going offshore and stifling the start-up environment at home.

Australia is already behind New Zealand, the US, the UK and Italy in approving rules governing the sector by opening up the market to retail investors ─ acceptance of which is widely thought to be paramount for the digital and small business economies.

Currently, CSEF in Australia is only available to wholesale investors with more than $2.5 million in investable assets or annual earnings of around $250,000. This accounts for just 200,000 individuals.

In a report presented to government earlier this year, the Corporations and Markets Advisory Committee said promoting crowd-sourced equity funding would encourage productivity and economic growth, as well as help keep entrepreneurs in Australia who might otherwise choose to establish their businesses in other markets.

However, the uncertainty of when the new regime would come into play has already had an impact, with Australian equity crowdfunding platform Equitise set to launch in New Zealand, rather than Australia, in November.

Writing about a recent meeting with government on the company’s blog, Equitise founder Chris Gilbert said key stakeholders in the CSEF space should band together to grow the number of voices in this space. “Government is well aware and very supportive of CSEF; however what we are lacking is absolute urgency to get it pushed along faster.”

The full details can be found on Chris Gilbert’s blog.