ledgeMe co-founder Anna Guenther says the move to Oz will have several benefits. "Australia is set to legalise equity crowdfunding later this month," she explains. "We plan to be on the ground there, to connect with potential partners, work with local companies and assess the final regulatory landscape.'
PledgeMe has received a spot in the HotDesQ programme run by the Queensland government, and will be setting up in Brisbane. The programme provides networks, support, and funding for companies to relocate to Queensland.
She says the company is taking a careful approach to expansion. "We're excited that Australia is finally entering this space, but also cautious," says Guenther. "America introduced equity crowdfunding last year, but it seems that over-regulation has stymied the potential of equity crowdfunding there".
Title 3 of the Jobs Act came into force in the US in May last year. In the first year, only about NZ$52 million was invested through equity crowdfunding platforms in the US, compared to NZ$12.4 million in New Zealand's first year, despite New Zealand only having about two percent of the population of the United States. As Guenther explains: "The subdued first year in the US could also be due to the availability of capital, but when running an equity crowdfunding campaign costs $20,000 - $50,000, plus ongoing compliance costs, early stage and growing companies just won't go there."
Australia is looking to introduce more restrictive equity crowdfunding regulations than New Zealand, with investor caps of $10,000, requirements for companies to shift their structure and become public unlisted companies adding compliance burdens, restrictions on emailing offer documents, and strict rules around advertising. “We’re going to do everything we can to help Australia temper their over-regulation,” says Guenther. "But if their legislation doesn’t actually help companies, we won’t stay.”
The Australian Corporations Amendment (Crowd-sourced Funding) Act 2017 will take effect from 29 September 2017.