Small companies don’t have to borrow
Business Advisory Services Update
The Crowd Sourced Funding Equity Raising amendments to the Corporations Act in 2018 enabled private companies to be able to offer the public shares as an alternative to borrowing money.
Crowd Sourced Funding has presented great opportunities for small companies and also to Accounting Firms who have embraced this concept, by ensuring that clients who are interested in the concept of raising capital from the public and issuing shares to the public understand the intricacies of the Crowd Sourced Funding Equity Raising Process, and appreciate that the company requires realistic documentation including:
- Business plan for the next five (5) years
- Predictive accounting reports – budgets, cash flow forecasts and projected balance sheets
- Training/professional development material for the leadership team relating to: corporate governance; reporting to a Board of Directors; creating a ‘rhythm of meetings’ to ensure appropriate due diligence
- Crowd Sourced Funding Offer Document – required by law
Capital has been raised by companies whose businesses embrace a wide range of business activities.
In the Crowd Sourced Funding Year Book, produced by the leading equity crowdfunding platform Birchal, the following data was released:
Pre-money valuation had an average multiple of 8.7 times.
Birchal CEO Matt Vitale said, “Birchal works closely with companies as they prepare for an offer. There is an expression of interest. Where the terms aren’t set….and companies meet with possible investors.”
“It’s imperative that companies get their valuation right and there is support before they open the offer.”
“Companies are engaging with investors and making sure the minimum target is covered… before they open it.”
Businesses already generating more than $1M in revenue made up a greater chunk of raisings – almost 50%. In 2022, while 29% of all businesses undertaking equity crowdfunding rounds already had ‘positive earnings’.
The percentage of businesses that were pre-revenue made up only 16% of raises in 2022.
ESS BIZTOOLS Crowd Sourced Funding Product Package assists Accountants to deliver the services that aspiring Companies need. To find out more, contact us on 1800 232 088 or email .
