Equity crowdfunding industry in Australia sees 16% growth

The latest FY24 Funded report reveals increased platform activity and sustained stability in the Australian Crowd-Sourced Funding (CSF) industry. Despite challenging economic conditions, the number of companies using equity crowdfunding increased by 16% in the financial year 2024 compared to FY23. This signals growing confidence in the CSF funding model.

Australian equity crowdfunding volumes remained stable, delivering AUD $64.5 million from 35,000 investments. Birchal hosted 66 of the 99 campaigns, raising AUD $46.5 million from 27,000 investors. The next closest competitor raised AUD $8.2 million.

Matt Vitale, Co-Founder and CEO of Birchal, noted, "The last financial year demonstrated remarkable resilience with equity crowdfunding levels remaining consistent with 2023, contributing AUD $64.5 million to the startup ecosystem. Despite the challenging funding environment, a 16% increase in the number of companies using CSF compared to FY23 highlights the growing recognition of CSF as an efficient way to raise capital."

The report indicates that while there were more offers on the platforms this financial year, the average deal size of AUD $661,000 reflects a conservative investor market, likely due to rate rises and general economic uncertainty. This situation contrasts with broader venture capital and angel funding channels, where fewer targeted mega rounds increased funding volumes.

Successful CSF offers outpaced new listings on the Australian Securities Exchange (ASX) for the second consecutive year. Only 56 ASX IPOs were completed in FY24, one fewer than in FY23.

The CSF industry has rapidly penetrated the Australian market, with approximately 130,000 Australians participating in CSF offers. "It is evident from the Funded Report that startups and SMEs play an essential role in driving economic growth; they are the lifeblood of Australia's economic future," Vitale added. He also highlighted potential concerns regarding proposed changes to wholesale and sophisticated investor tests, which could narrow the pool of investors able to invest in startups.

The FY24 report identifies some notable trends. The Food and Beverage sector was the top performer for the third consecutive year, raising AUD $19.7 million across 29 deals. Healthcare, primarily driven by medicinal cannabis-related businesses, raised AUD $14.2 million. The sustainability sector continued to grow, raising AUD $8.1 million across 14 offers, while Manufacturing made it to the top four categories for the first time.

Dom Pym, Co-Founder of Up, Pin Payments, and his family office, Euphemia, commented, "As an early investor in Birchal, I'm thrilled about the future of equity crowdfunding in Australia. With over AUD $211 million raised, Birchal stands as a cornerstone of financial infrastructure for our startup ecosystem. The data from Birchal's latest industry report underscores the power of CSF in providing vital capital to innovative startups that might otherwise be inaccessible to investors."

In FY23, 46% of all successful CSF offers were made by companies with more than AUD $1 million in reported revenue, representing an 8% increase. Interestingly, 28% of CSF deals in FY24 were follow-on raises.

On a quarterly basis, Q1 and Q2 showed strong performance with over a 20% increase in funding volume compared to FY23. However, these gains were offset by a softer finish in Q3 and Q4. Since the CSF regime commenced in 2018, the industry has contributed AUD $315 million across 427 CSF offers.

A state-wise breakdown shows a 16.5% increase in funding volume in New South Wales, with AUD $19 million raised. Victoria saw a 16.9% rise to AUD $9 million across 13 deals, while Tasmania contributed AUD $8 million from three campaigns, including the largest deal of FY24.

For the first time, the report includes global perspectives from CSF intermediaries such as CrowdCube, Seedrs, DealMaker, and FrontFundr, providing insights into trends shaping the global CSF landscape.