Posted on December 17, 2012 By iPledg With 0 comments

Crowd Funding – The Challenge for Australia for 2013

A movement has begun. Early adopters have jumped on board and achieved success. Creative, commercial, charitable, and community projects have all successfully achieved funding from an audience only just waking up to this wonderful new form of e-commerce. And it is in this that the big challenge for 2013 lies – bringing awareness of crowd funding to the masses and getting them to engage

Twelve months ago, Australia boasted just seven crowd funding sites. Since that time, one has ceased to exist, one of the major players who was promising much has largely laid dormant, and there have been a handful of new platforms pop up in the last few months. From this group, there are three “category killers” who should jostle for position and their particular niche in the market in the coming twelve months (and beyond). However, despite there best efforts, less than two percent of the population have dipped their toe in the water and tried crowd funding for themselves. This is where the challenge and the opportunity lay side by side.

Whilst most of the commentary about crowd funding in the media has been positive, in August this year ASIC threw the cat amongst the pigeons when they circulated their warning that crowd funding could not be used to offer any form of equity or financial return. Many took this that crowd funding could not be used by businesses to raise early stage capital, and many potential users shied away. Operators of the leading platforms were quick to weigh into the discussion, and correct the mis-communication, assuring the public that crowd funding as a discrete activity is not prohibited in Australia, that the platforms were aware of and adhering to the rules, and that business can indeed raise capital through crowd funding, as long as they operated within the guidelines.

Along with the challenge to increase awareness of crowd funding amongst the Australian public, the is also the task of lobbying the politicians and bureaucrats to change legislation to allow for investment crowd funding to become permissible under law as it has in the USA. Thanks to amendments to the JOBS Act, small business in the USA are about to enter the “Year of the Entrepreneur” where it is conservatively forecast that $300bil will become available to small business by way of local community investment through investment crowd funding. Australia runs the risk of being left behind and for small business to move off shore in the search for this type of funding. The results could have a catastrophic impact with lingering effects if the government does not act soon and bring Australia up to pace with their US cousins.

Crowd funding has established a considerable foothold in Australia, but there is still a lot of work to do to grow the awareness of the crowd and their subsequent engagement, both from the perspective of project creators using the medium, as well as project funders to pledge their support. It is a challenging task that is ahead of the market, but one that once met, will be rewarding for all.

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