Crowd Sourced Funding: great for innovative businesses!
Business Advisory Services Update
Most innovative businesses will need to seek “seed capital” to get them started. This will be funding primarily from friends, family and associates who are aware of your client’s innovative project.
The initial “seed capital” might have been $200,000 or thereabouts, and the company has utilised those funds together with R&D taxation benefits to develop a prototype.
The prototype looks quite promising and, with the injection of capital, can probably be successful in the market. Your client rings you and enquires, “Where will I get the money from to take this project from a prototype to a completed commercial product?”
That new capital could come from Crowd Sourced Funding, perhaps in conjunction with a government grant.
Crowd Sourced Funding Equity Raising enables companies which have a vision to be able to raise up to $5million in a 12-month period from the public. The company is required to appoint a Crowd Sourced Funding Intermediary to ensure that the company qualifies to raise capital in this way. That intermediary then handles the actual promotion of the capital raising process. However, the company will require considerable accounting input relative to the preparation of the business plan, budgets and cash flow forecast and projected balance sheets and a mentoring process to advise the Directors and Leadership Team on the rules relating to Crowd Sourced Funding Equity Raising.
Over the last few years, over $219million has been raised by companies utilising Crowd Sourced Funding. According to a recent report, only about 3% of the people that enquired were accepted into the program. This indicates that the 97% that were rejected were neither properly prepared nor provided sound advice on the Crowd Sourced Funding Equity Raising process.
This is an opportunity for accounting firms that are using a product like ESS BIZTOOLS Crowd Sourced Funding Equity Raising Product to guide them on the process.
Want to know more? Call 1800 232 088 for a discussion on how ESS BIZTOOLS can assist your firm to deliver Crowd Sourced Funding advice to your SME clients and prospects.
