Are you ready for an equity crowdfund? Questions to ask yourself
Wondering if you’re ready? Here are some questions to ask yourself if you’re considering equity crowdfunding in Australia.
As an equity crowdfunding platform, we’ll help you prepare for a campaign but there are some things you can do to make sure you’ve got the best chances possible when we start working together.
Is your organisation eligible?
To do an equity crowdfunding round in Australia, you’ll need to:
- Be an Australian company
- Have a gross asset and turnover of less than AUD$25million
- Not raise more than $5million
- Not have the sole purpose of investing in other companies
We thought we’d tell you this upfront because there’s not much we can do together if you’re ineligible!
It’s also worth noting that if you need to raise more than $5m, you’ll have to look for a different investment vehicle.
Are you prepared?
Getting educated
Have a flick through the RG 261 Crowd-sourced funding: Guide for companies so that you have some idea of the legislation that governs the process you’ll be undertaking. You’re going to be re-jigging the ownership structure of your company and asking lots of people for money so you should really know the ins and outs of the vehicle you’re using, even if you eventually get legal advice. The document is pretty dense but if you start by reviewing the contents on page 3, you can see how you might tackle the information.
Slicing up your company’s ownership
Have you thought about what this means and are you ready for it? This is more of a personal question to consider. Once you start down this path, you can’t go back so it’s worth taking the time and doing the introspection you need to do to be ok with it.
Plans for the funding
Throughout the process of the campaign, you’ll have to put together a clear plan for the funds you’re raising. You should have a good idea of where you want the company to go and how the funding will enable this.
Do you have the resources?
There are costs involved in doing an equity crowdfunding campaign. You will need a lawyer and an accountant to help prepare your documents. You will need a videographer to do your pitch video. You may need a marketing resource to assist with the campaign. There are also upfront costs for preparing yourself to do the campaign. You may need other consultants to assist with business planning and anything else that comes up.
Some things can be bootstrapped and maybe you have some arrangements in place already. Just remember that you’ll need to be handling this campaign on top of business as usual.
Is your crowd ready?
Do you know who they are?
We’re talking names and email addresses here. Could you list out the first 50 people you would reach out to? If not, take an hour and see if you can.
Do they love you enough to support you?
Some may love you enough to buy from you, but to buy a bit of the company? That’s a question you’ll only be able to answer if you’ve had those conversations.
Do they know it’s coming?
You can prepare your crowd by letting them know you’re considering it or by taking expressions of interest. We can walk you through this process as well, but the earlier you can let people know, the more time they have to think it through.
Up to you now!
If you are ready, get in touch with us.
Not quite ready? Check out these articles:
Get back to your roots and stay there: why equity crowdfunding might be for you
What to expect when you’re expecting an equity crowdfunding round
Preparing for equity crowdfunding with PledgeMe
If it turns out you’re not ready and you’re up to here, you should have a good idea of next steps. We’d also suggest following us on Medium and the socials so that we can get to know one another for when you are ready.
