Paul Niederer

The metrics behind the top Equity Crowdfunding Campaigns

Paul Niederer CEO of ASSOB, Australia’s longest running and most successful Crowdsourcing platform shares the best in class results from the last sixteen capital raisings on the ASSOB platform.

Success leaves clues

I wondered, what is “Best in Class” in raising funds from predominantly retail or unaccredited investors.

Best way to find out was to look at 16 of the most successful, recent Startup equity raises on the ASSOB Equity funding Capital Raising platform. These 16 raised over 11 million dollars together on ASSOB.

Most of these companies were after their first capital, meaning there was usually some sweat equity already, maybe some family money, but most were not ready for Angels or VC’s. Thats why they came to ASSOB.

Bootstrap, then ASSOB, then Angels then VC’s.

ASSOB-Infographic

Best in Class

Lets determine what is “Best in Class” from the sixteen recent ASSOB raises that raised on total $11.4 million.

  • Raise size. $425,000 to $1,592,000 with an average of $637,666. You may seek to raise less or more than $600k but our experience has shown that an opportunity with a convincing, compelling and credible story, coupled with a balanced, passionate and likeable team generally raises from $500k upward for an equity raise.
  • Average amount raised daily. $680 to $6,076 with an average of $1685. So if you are out to raise some equity funding from unaccredited investors $1685 per day is a good figure to start with to work out how long you will need to raise your money. Best in class $6,076 a day. Lets say $6000.
  • Crowd size. Generally the larger your crowd  the more you raise. Gathering a crowd is essential to a raise. The stats show that the crowd size is usually between 335 and 991 people. These are people that have visited your profile page and have had more than just a brief look. The average crowd size is 667 people. Of these 667 people around 40% actually download details about the offer including the offer document. On average 8% of them invest. Best in class is a crowd of 991. Lets round that off at 1000.
  • Investor locality. 60% of investment comes from the same state or province so geography matters.
  • Investor type. Over half of investment came from retail or unaccredited investors. While the average was 56% the number of retail investors in raises ranged from 32% to 79% Usually the first $200,000 to $300,000 came exclusively from this group. Here is the breakdown.
    • Retail  / Unaccredited investors 56%
    • Existing Shareholders 17%
    • Sophisticated / Accredited investors 15%
    • Overseas investors 6%
    • Associates of he business 4%
    • Professional / Accredited investors 2%
  • Raise Sectors. Not every company is headed for a Silicon Valley exit. Most are not as exciting as the SnapChats and Ubers of this world. The 16 raises included here covered a broad range of sectors. All companies were Australian with Australian innovation. Fitness, Pharmaceutical, Welding technology, Cloud technology, Designer Furniture, Robotics, Wealth Management, Risk Management, Dental Technology, Online Photos, Open Source Software and Senior Welfare.

What will it take?

So what does all this mean if you are seeking equity capital?

If you are preparing for an equity crowdfunding raise, including retail/unaccredited investors, then it is well worth playing around with these “Best in Class” stats to get a feel about where your investment could come from and in what amounts.

Say you want to raise $600,000 based on performing like the “Best in Class”.

  1. If you do a good job, and work hard, the fastest you should be able towrap it up is in 100 days
  2. You need to gather a crowd of just under 1000. That means you need to drive 1000 interested people to your profile page on the equity funding platform.
  3. Focus at least 60% of your effort on local investors.
  4. Retail investors are needed to get initial traction. By the end of the raise you will have at least 32% of your investment from this group and in some cases as high as 79%.

In a sentence ?

$600k in 100 days from a gathered crowd of 1000 with 60% local investors and over half retail/unaccredited investors.

paul-niedererPaul Niederer is the CEO of the Australian Small Scale Offerings Board (ASSOB), Australia’s largest and most successful business introduction and matching platform and one of the more structured methods of raising early stage investment funds with a focus on compliance, disclosure and corporate governance.  To date ASSOB has raised over $135 million for Australian startups. You can read more of Paul’s thoughts on crowdfunding and early stage investing at his blog Paul Niederer.

About : http://paulniederer.com/

We only need a few simple changes to enable Equity Crowdfunding in Australia – Paul Niederer CEO ASSOB

paul-niedererAfter our post last night regarding Crowdfunding & The Submission of the CAMAC report on Crowdfunding Regulations, Paul Niederer, CEO of ASSOB wanted to throw some weight behind the discussion. He clearly outlines the actual legislative changes need to allow Equity Crowdfunding to operate in a meaningful way. 

 

Most people haven’t heard of Crowdfunding let alone equity crowdfunding. What that means is that if regulatory change is required there isnt a lot of domain knowledge about to ensure that what gets implemented is practical and workable. Witness the U.S.A. The path taken is legislative change, then regulatory change then industry implementation.

Already most participants are saying what has resulted is unworkable.

The United Kingdom has taken a more measured approach. The regulators worked with industry participants like Crowdcube and Seedrs to test and refine methods so that eventual changes have been road tested.

Australian regulators are waiting on the outcome of CAMAC’s study of submissions and other countries findings before making a move in the equity crowdfunding space. Hopefully this wont mean a U.S. style implementation.

Legislation, then regulation, then implementation with feedback cycles from industry then updated legislation and regulations.

There is an easier path because Australia has 20 odd years of experience in managing investment from retail investors which has spawned ASSOB the oldest and longest running equity crowdfunding platform in the world.

Eight years, 300 Startup / Early stage raises and $138 million later we believe there is an easier path than the path most countries are taking.

At the end of the day most equity crowdfunding is about legitimising transactions that take place from money invested into the early stage space that comes from friends, family, fans and followers. High net worth investors are already covered by adequate legislation.

A recent article in Forbes stated “For the vast majority of people, money is raised from banks, from personal savings, and from family and friends.” The task of equity crowdfunding regulations is to properly legitimise this.

This is not a new area for Australian regulators as small scale offerings legislation has operated in this space for a long time.

So what is the suggested pathway forward?

Australian regulators are able to modify the fundraising provisions of the Act for ‘minor and technical relief’ without the need of a full parliamentary enquiry or indeed a report from CAMAC or any other government body.

Like the U.K. regulators they can sit down with industry participants and see what would work in practice.

Here are some of the changes that would enable Australia to embrace two huge trends that are driving crowdfunding. Technological Disruption and Meaningful Investing. For a more detailed discussion visit here.

  1. A new category of Equity Funding Portal be established for “Crowd Sourced Equity Funding” CSEF. Maximum $1 million per company per annum with a $2,500 max per investor.
  2. Small Scale Offerings 20 retail investors in a twelve month period should be lifted to 100 but there should be a cap of $25,000 per investor per annum. A maximum of $2 million can be raised per annum including the “CSEF” exclusion.
  3. Broaden the definition of Associates. This group is not fully handled sufficiently in existing legislation.
  4. Add  category of “Experienced” investors. These could be for example people that have reached a certain level in Angel and Director organisations
  5. Recognise that consultants can accept shares for services rendered but cannot invest funds. This will assist cash-strapped companies in obtaining the corporate advice they need, without burdening operational cashflow requirements.
  6. Portals cannot give advice or have a pecuniary interest but can curate offerings.
  7. Registered Portals can disclose summaries of the offer information to the public but prospective investors need to log in to see full deal details. Promotions must follow rules as per small scale offerings regulations.

A graphic that summarises this is as follows:

NiedererCFregulatoryOverview.001
All the changes above can be implemented by the granting of relief from the relevant provisions of the Corporations Act, consistent with ASICs power under s741 (ASIC’s power to exempt and modify) and 1020F (Exemptions and modifications by ASIC) to modify the fundraising provisions of the Act for ‘minor and technical relief’ without the need of a full parliamentary enquiry.
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