Time to start the catching-up process for equity crowdfunding for start-ups, says AVCAL
The Australian Private Equity & Venture Capital Association Limited (AVCAL) has welcomed the release of the Corporations and Markets Advisory Committee’s (CAMAC) report into equity crowdfunding in Australia.
AVCAL’s chief executive, Yasser El-Ansary, supports the key policy directions set out in the CAMAC report.
“Australia has been lagging behind other developed economies in setting out a policy framework to support this new and evolving approach to raising equity capital by start-up businesses, and because of that we have some catching up to do,” he says. “This report provides us with a comprehensive analysis of how we should move forward with facilitating a market for equity crowdfunding in Australia, while ensuring there are appropriate safeguards for investors who might not have significant experience investing in high-risk ventures.
“Establishing a new exempt public company structure to facilitate equity crowdfunding is certainly worth exploring, but we have to make sure we don’t fall into the trap of adding new administrative complexity which leads to a significant increase in compliance costs for start-up businesses.
“What start-ups don’t want to have to do is spend significant amounts of money on lawyers and accountants to manage their compliance obligations – they want to focus their resources on bringing their innovative idea to life and creating a commercial business.
“There also needs to be some discussion on the proposed investor cap of AUD2,500 per annum by an individual investor, which will be critical to the effectiveness of the new regime.
“Expectations are high in the venture capital industry that the government’s National Industry Investment and Competitiveness Agenda – due to be released in the coming months – will lay out a long-term comprehensive policy response framed around incentives that help to drive more private sector investment into innovation and venture in the future. With this report, there is now a very compelling case for equity crowdfunding to feature in the government’s future policy plan.”
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