Crowd Sourced Funding Equity Raising Package

For Small Proprietary Companies and Eligible Public Companies
Gold Silver

  • Overview of CSF
  • Identifying clients who might be interested
  • Marketing and promotional material to inform clients
  • Explanation of CSF Intermediary’s role and responsibilities
  • Step by step guide to producing a CSF Offer Document
  • Overview of the Offer Platform process
  • Post capital raising guide
  • Check lists for each step of the capital raising process
  • Mentoring Package – 1 x 60-minutes

Company directors and officers will require advice on

How Crowd Sourced Funding Operates

including:

  • Identifying client who might be interested:
  • A company/business with a turnover over $2 million that wishes to "scale up" to a larger company

  • A company with a new product, process or service that does not qualify for Early-Stage Innovation Company Capital Raising because of the company’s age, turnover or expenditure being higher than the allowed amounts.  

  • A fast-growing ambitious business
  • A company wanting to expand
  • A company wanting to acquire other businesses
  • A company with the CEO with a “big audacious idea”!
  • A CEO with an exciting vision!
  • A company with debts that the directors would like to repay, save interest and enable the security that has probably been supplied by someone else, to be released
  • A company with a succession problem that an injection of new capital would assist in sorting out!
  • Identifying clients who meet the legal requirements to be a Crowd Sourced Funding Company

  • Value of consolidated gross assets must be less than $25 million
  • Consolidated annual revenue of the company and its related parties must be less than $25 million
  • Neither the company nor a related party can be a listed corporation anywhere in the world
  • Neither the company nor any related party of the company is included in an official list of a financial market operated outside of Australia
  • Neither the company nor any related party has the intention of utilising the funds sought to be raised by the offer to issue a credit facility to the company or a related party of the company (which includes investment in securities or interests in other entities or managed investment schemes)
  • An understanding of the Intermediary’s role and responsibilities
  • The intermediary is a business holding an Australian Financial Services Industry License with a Crowd Sourced Funding endorsement issued by ASIC, which acts as the “Gatekeeper” and is required to check all documentation before it is lodged on the Intermediary’s website.
  • The Intermediary is required to ensure that the documentation that is being prepared by the issuer is accurate and that a “communication facility” is available for potential investors to ask questions of the directors and management team of the issuer and the Intermediary.
  • The Intermediary has a wide range of responsibilities under the legislation.
  • The Intermediary is required to determine whether a person, who is proposing to invest, is a “retail investor”. If so, the Intermediary is required to monitor a retail investor’s investment in the issuer over the preceding 12-months to ensure that the retail investor has invested no more than $10,000 into the company.
  • Intermediaries must not financially assist a retail client to acquire securities.
  • Material to guide you through the Crowd Sourced Funding process:
  • Overview of Crowd Sourced Funding:
    • Crowd Sourced Funding Equity Raising Overview
  • Crowd Sourced Funding now available for Small Proprietary Companies
    • Small Proprietary Companies at Last Able to Access Crowd Sourced Funding Capital Raising
    • Small Proprietary Companies Checklist
  • Understanding Crowd Sourced Funding – Equity raising:
    • What is Crowd Sourced Funding?
    • The Crowd Sourced Funding Legislation
    • Determining eligibility as a Crowd Sourced Funding Company
    • Crowd Sourced Funding Issuer Cap
    • Making a Crowd Sourced Funding Offer
  • Potential clients:
    • Matrix for the determination of potential clients who might be interested in raising capital
    • Potential investors
    • Retail clients
    • Crowd Sourced Funding Intermediaries
    • Overview of duties and responsibilities
    • Negotiations with intermediaries
    • Appointment of intermediary for a client
    • The listing process
  • Preparation of Crowd Sourced Funding Offer Document:
    • Checklist to ensure compliance with the legislation
    • Template for the preparation of a Crowd Sourced Funding Offer Document
  • Post capital raising:
    • Issuing of share certificates
    • Lodgements required with ASIC
  • Other professional services that your clients may require:
    • Preparation of Business Plan
    • Preparation of Budgets and Cash Flow Forecasts
    • Company valuation
    • Determination of share price
    • Supply of a Virtual Chief Financial Officer Service

Intermediaries


Companies that raised capital


Crowd Sourced Funding Intermediary in relation to Shebah



Accountancy firms/business advisers are well placed to be able to supply these services to SME companies.
The ESS BIZTOOLS’ Crowd Sourced Funding Equity Raising Package will assist you to deliver an outstanding professional services for your client – thus enabling your firm to grow with your clients.

New Income Stream

The majority of companies interested in Crowd Sourced Funding Equity Raising will require assistance from accountancy/business advisory firms for the preparation of their Crowd Sourced Funding Offer Document and possibly associated documents. This gives an outstanding opportunity for your firm to offer proactive advice to your clients and prospects and to differentiate your services from those of your competitors – thus creating a “new income stream”.
Potential Sources of New Income:
  • Crowd Sourced Funding Equity Raising Mentoring – indicative fees $5,000 - $11,000 (plus GST)
Potential Additional Fees:
  • Preparation of Business Plan – indicative fees $10,000 - $30,000 (plus GST).
  • Preparation of Budgets and Cashflow Forecast – indicative fees $3,000 - $10,000 (plus GST).
  • Company valuation and share price determination - indicative fees $10,000 - $25,000 (plus GST).

  • Company directors’ mentoring advice relative to Corporate Governance – indicative fees $2,000 - $10,000 (plus GST).
  • Virtual Chief Financial Officer Service – indicative fees $10,000 - $125,000 (plus GST)
Your investment:

ESS BIZTOOLS’ Crowd Sourced Funding Equity Raising Package annual subscription - $999 (including GST).

OR

Alternatively, if you wish you could subscriber to ESS BIZTOOLS’ Gold Package – includes Crowd Sourced Funding Equity Raising Package – for an annual subscription of $2,970 (including GST).

Package Content

The Crowd Sourced Funding Equity Raising Package incorporates commentary on the following areas:

  • How to Use Webinar
A detailed how to use "Crowd Sourced Funding Equity Raising Webinar" is included in the product package.

  • Seminar/Webinar Package for Subscriber's Use
The Seminar/Webinar Package gives subscribers the ability to present seminars/webinars to clients/prospects on all aspects of Crowd Sourced Funding Equity Raising.

  • Web Page Article
The web page article will assist you to communicate with your clients/prospects that you are familiar with Crowd Sourced Funding Equity Raising and keen to assist clients/prospects to get ready for a "Crowd Sourced Funding Ready Status".

  • Improving Your Bottom Line
A promotional article on Crowd Sourced Funding Equity Raising that you can badge and send to your clients/prospects to inform them about Crowd Sourced Funding Equity Raising and to inform them that your firm is keen to assist them if they would like to explore Crowd Sourced Funding Equity Raising.
  • The ESS BIZTOOLS’ Crowd Sourced Funding Equity Raising Package incorporates:
Detailed questionnaire/action plan to assist accountants/advisers to conduct a due diligence review on a company to determine whether it complies with Crowd Sourced Funding (CSF) status including:
  • CSF Legislation Overview
  • Eligible CSF Company
  • Issuer Gap
  • Fund Raising in addition to a CSF Offer
  • Primary Issue Only
  • Making a CSF Offer
  • Corporate Governance Concessions
  • CSF Intermediary’s - Licensing Requirements
  • Australian Market Licence (AML)
  • The Obligations of a CSF Intermediary
  • Stages of a CSF Offer
  • CSF Investors
  • General Investor Protections
  • Investor Protection for Retail Customers Only
  • When is a CSF Document defective?
  • Obligations in relation to defective documents
  • Investor Rights - defective documents
  • Criminal and Civil Liability
  • ASIC Role Crowd Sourced Funding Equity Raising
  • Crowd Sourced Funding Equity Overview
  • Why would you use Crowd Funding to raise capital? – A Q/A summary to assist you with this conversation with your clients.
  • How does Crowd Sourced Funding Equity Raising compares with other capital raising strategies available in Australia?
  • Checklist of matters to be considered by directors relative to Crowd Sourced Funding Equity Raising
  • Checklist of matters to be attended to by the Intermediary (Gatekeeper) appointed
  • Checklist to guide an accountancy business in offering a Crowd Sourced Funding Due Diligence Review

Assisting Your Clients On The Crowd Sourced Funding Journey

Making a Crowd Sourced Funding Offer Document

ESS BIZTOOLS' Crowd Sourced Funding Equity Raising Product Package includes a complete overview of the requirements for the preparation of the Offer Document, including comments on:

  • nomination of minimum and maximum amounts relating to the offer
  • items to be considered in the development of the Offer Document
  • discussion on the rules that require the publishing of the Crowd Sourced Funding Offer Document on the platform of the Crowd Sourced Funding Intermediary
  • the company directors/senior managers should ensure that, if any enquiries are received relative to investing in the company, those persons are referred to the Intermediary’s website
  • in any advertisement or other publication organised by the company there must be included a prescribed statement that investors should consider the Crowd Sourced Funding Offer Document and the general risk warning in deciding whether to apply for shares under the offer

The Crowd Sourced Funding Equity Raising Product Package, produced by ESS BIZTOOLS, includes the following documents relative to the preparation of the Crowd Sourced Funding Offer Document:

  • Making a CSF Offer (BAS5014)
  • Crowd Sourced Funding Offer Document (BAS5015)
  • The CSF Offer Document Working Papers (BAS5121)
  • Corporate Due Diligence Checklist (Paper 041-020)

together with a number of other documents that all contribute to the preparation of the Crowd Sourced Funding Offer Document.

Some of the Current Capital Raising Listed on Intermediaries' Websites
  • Endeavour Brewing Co - craft beer manufacturing
  • DHF Surf - surfboard design
  • Direct Injection Technologies - technology to supplement livestock
  • Purahealth - health supplements
  • Australian Boutique Spirits - manufactures and markets Australian made spirits
  • Internet Gaming - established company seeking funds to expand into new networks and markets
  • Black Hops Brewery - craft beer and wine
  • HUTT - Tomorrows House Today - delivering the future of zero carbon housing
  • Mobiltech - travel solutions
  • Edutech - cloud enabled student tutoring
  • Medical Services Group - multi venue medical services business
  • Industrial Tech - patented safety device seeking capital after first sale
  • Dreamcity - an immersive theme park combining education with fun
  • Oscar Razor - Australian premier shave club
  • Your Mates - craft beer and wine
  • Picaluna - network of professional funeral planners and celebrants
Help Clients Assess and Appoint an Intermediary

Understanding Intermediaries' Duties, Role and Powers

An important role for an accountant assisting clients to raise Crowd Sourced Funding Capital is to ensure that the clients have a clear understanding of the Intermediary’s duties, role and powers.

The “Crowd Sourced Funding Intermediaries” form (BAS5135) will assist you to communicate to your clients the Intermediary’s responsibilities including material to enable you to discuss:

  • gatekeeper role
  • advice and checking the Crowd Sourced Funding Offer Document
  • provision of a communication facility
  • directors and senior managers' obligations relative to being available to supply answers via the communication facility to potential investors who have asked questions
  • Crowd Sourced Funding Risk Warning requirements that the Intermediary has to monitor
  • cooling off rights for retail investors that the Intermediary has to implement
  • risk warning documentation to be included within the Crowd Sourced Funding Offer Document
  • the agreed fee payable to the Intermediary has to be disclosed on the Intermediary's website listing for your client's company and also be disclosed in the Crowd Sourced Funding Offer Document

Appointment of An Intermediary

Once your client's directors and senior managers understand the Intermediary’s responsibilities, you should then discuss the selection of an Intermediary with your clients and assist them to select an Intermediary that they are confident they can work with in this very important phase of the capital raising process.

The “Intermediary Checklist” (BAS5128) contains nine questions to assist you and your clients to identify a suitable Intermediary for your client to appoint.

The various forms mentioned are all contained within the Crowd Sourced Funding Equity Raising Product Package available to subscribers.

Information About the Company Required

In most instances we envisage that the accountant will be required to assist in the preparation of documents that will be important in the finalisation of the Crowd Sourced Funding Offer Document and in the discussions with the Intermediary.

These documents include:

  • the annual financial accounts for the company
  • an indication as to whether those accounts were audited and, if so, who was the auditor
  • a summary of the company including commentary on:
  • industry
  • products/services
  • customers
  • team
  • directors
  • location
  • website
  • intellectual property owned by the company
  • unique competitive advantage
  • or all of this information could be incorporated within the company’s business plan
  • budgets and cashflow forecasts for the next 3 years
  • calculation of the current value of the company
  • a calculation which the directors have signed off on relative to the number of shares in the company to be allocated for the minimum amount of capital targeted to be raised and the number of shares in the company to be allocated for additional amounts of capital raised over the specified minimum amount through to the specified maximum amount

The ESS BIZTOOLS' Crowd Sourced Funding Equity Raising Product Package includes commentary on each of these items for discussion with the company directors and senior managers.

Preparing the Crowd Sourced Funding Offer Document

The ESS BIZTOOLS' Crowd Sourced Funding Equity Raising Product Package includes a range of templates to assist in the preparation of an Offer Document.

The “Crowd Sourced Funding Offer Document Working Papers” (BAS5121) is a form to facilitate the assembly of information required for the Crowd Sourced Funding Offer Document.  This form is divided in accordance with the requirements of the legislation relative to information which must be disclosed.

We have also included the “Corporate Due Diligence Checklist” (Paper 041-020) to assist in the identification of any other information that the directors and senior managers and intermediary believe should be disclosed in the Crowd Sourced Funding Offer Document.

The legislation requirements relative to the receipt of consent from various people for inclusion of their names and/or reports in the Offer Document have to be abided by and a Register of Consents needs to be kept.  These requirements are discussed in “Register of Consents Received for CSF Offer Document and Associated Documents” (BAS5122).

The other forms that are included within the Crowd Sourced Funding Equity Raising Product Package, relative to the preparation of the Crowd Sourced Funding Offer Document, include:

  • Consent Form for Persons Contributing Reports or Being Named in Documents (BAS5123)
  • Responsibility for the Preparation of Documents for CSF Offer Document - Director or Senior Manager (BAS5142)
  • Risk Summary (BAS5161)
  • Company Director Declaration (BAS5165)

The various forms mention are all contained within the Crowd Sourced Funding Equity Raising Product Package available to subscribers.

Overview of Some Capital Raising-Information from some Intermediaries’ Websites
Xinja Bank 100% Digital Bank $2,400,000
Manrags Premier Socks and Underwear $363,250
Choovie Digital platform that matches moviegoers with empty seats $294,500
The West Wind Gin Australian Champion Gins $932,000
Memo Bottle Flat water bottle designed to fit into your bag $383,238
Bausele Timekeeper luxury brands with Australian inspired crowns $294,928
Pelikan Global currency App and prepaid Visa Card that you can use anywhere $248,930
Orderup Investment in a gaming brand $361,394
Park Leading soccer brand - balls, clothing $316,035
Sash An Australian take on modern Japanese fusion $184,321
Advice to Clients on Strategy They Should Follow

Utilise the "Revenue Corporate Information" form (BAS5100) to enable you to discuss with the company's directors/senior managers the information that has to be disclosed within the Crowd Sourced Funding Offer Document, which includes:

  • Directors' details
  • Alternative Directors' details
  • Company Secretary details
  • Financial accounts information for the previous year in particular was an audit performed and, if so, who was the auditor?

Related party information similar to the above.

Eligibility

The next step is to utilise the "Eligibility Questionnaire" (BAS5110) to determine whether the company is eligible to raise capital as a Crowd Sourced Funding Equity Raising Company.  This will enable you to have a discussion with the directors and senior managers on the strategies to be implemented.

Advising Directors of the Requirements to be able to Raise Capital

ESS BIZTOOLS has prepared the "Company Preparation Guide" (BAS5115) to assist you to communicate with your client on a range of matters relative to the company preparation to be able to raise capital.

The various forms mentioned are all contained within the Crowd Sourced Funding Equity Raising Product Package available to subscribers.

Media Articles

TitleSummaryPublishedLink
Black Hops - the Brewery Turning Beer Drinkers into Investors

Turning loyal customers into investors through equity crowdfunding is an enticing prospect for small businesses, but experts warn it can burn customer relationships if things go belly up...

Financial Review
Read article
Finex Xinja in Fresh Funding Round

Digital bank wannabe Xinja is set to give its investor base something to think about over the Christmas break...

Financial Review
Read article
Laws Open Way for “Crowd Fund” Firms

Our small and medium sized proprietary companies can now join the world of Crowd Sourced Funding Equity Raising thanks to the laws passed in the senate last week... 

Townsville Bulletin
Read article

Want To Know More?

A new opportunity for small/medium enterprises, inventors and entrepreneurs has emerged with the passing by the Australian Senate of the Australian government’s Crowd Sourced Funding Amendments to the Corporations Act to enable a small proprietary company to raise capital from the public.

SMEs and others now have three distinct opportunities where they can raise capital from the public without producing a prospectus.  These opportunities for capital raising are:

  • Crowd Sourced Funding
  • Early-Stage Innovation Company
  • Section 708 of the Corporations Act "Capital Raising"

The opportunity to raise capital utilising Crowd Sourced Funding has been a dream for many SMEs, inventors and entrepreneurs over recent years.  Thousands of small/medium enterprises, inventors and entrepreneurs are expected to avail themselves of the opportunity to raise capital in this unique fashion.  Australian now joins Europe, USA and New Zealand where SMEs have enjoyed this opportunity for the last six years.

Most of the entities seeking to raise capital using the Crowd Sourced Funding process are expected to be small/medium size businesses.  These types of businesses are traditionally the clients of small to medium-sized accountancy businesses all around Australia.  Small/medium sized accountants who gear up for the opportunity of being able to service this new emerging market will be able to create a significant “new income stream”.

An eligible company which is able to raise capital utilising crowd-sourced funding, will have a group turnover under $25 million per annum and gross group assets valued at under $25 million.

ASIC announced the first group of businesses licenced as Crowd Sourced Funding Intermediaries in January 2018.  Seven businesses were appointed as Intermediaries.  The Intermediaries are based in:

Sydney
4
Melbourne
1
Adelaide
1
Perth
1

Companies that have raised more than $3 million in capital are required to appoint an Auditor.

The legislation introduces some new titles to corporate law relating to the “gatekeepers” who are referred to as CSF Intermediaries.  The Intermediaries are businesses with financial services licenses which are expressly authorised by a further license to provide a crowd funding service.  In this role the Intermediary will check the CSF Offer Document and the other documentation required to be produced and will then list the company's Offer Document onto the Intermediary's website where it can remain for up to three months or such lesser time that has been stipulated in the Offer Document.

The legislation includes a restriction on the amount of money that a “retail investor” can invest in a company raising capital by Crowd-Sourced Funding to $10,000 every twelve months.  The legislation does not identify any minimum investment amount.

There is no restriction on the amount of investment from a “sophisticated investor” (defined in section 708(8) of the Corporations Act).

Companies will be able to raise capital by utilising a mixture of crowdfunding and raising capital utilising section 708 of the Corporations Act, if they wish.

Obviously the benefit from this legislation for small/medium enterprises, entrepreneurs and inventors is that there is an opportunity to raise money for business expansion without having to utilise extensive personal funds, second mortgages on houses, credit cards or borrowings from relatives etc.

However, companies will need to be able to produce adequate documents which will form part of the CSF Offer Document to convince firstly the CSF Intermediary and the “crowd” that the company is in an “investment ready state” and that the company’s directors and management team understand modern corporate practice and the immense responsibility of using other people’s money in their business activities.  Some of these companies will grow into very large corporations which will have significant benefits for their founders and investors.

However this “fairy tale” ending will not be achieved unless there has been strong discipline shown in the preparation of the documentation that is going to be required to be submitted to the “gatekeeper”.

The “Crowd Sourced Funding Equity Raising Package” will assist your accountancy/business advisory business to advise your clients adequately to understand the various components of the Crowd Sourced Funding opportunity and will place you in an ideal position to work with your clients in the preparation of the various document required for the Crowd Sourced Funding Offer Document.


Equity Crowdfunding Forecast to Grow Tenfold in Just Five Years

Enable Funding (formerly ASSOB – Australian Small Scale offer Board) has forecast that the new crowd sourced funding capital raising market will soar from $119 million in 2016 (primarily s709 capital raising and some Early Stage Innovation Company capital Raising) to $1.5 billion in 2021, which would result in a tenfold increased.  (click here).

Other articles on crowd sourced funding:

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