Birchal report highlights AUD $64.5m rise in equity crowdfunding

An industry report released by Birchal indicates that crowd-sourced funding (CSF) in Australia displayed sustained stability and growth during the financial year (FY) 2024.

The report highlighted a 16% increase in the number of companies utilising equity crowdfunding despite broader market challenges and economic downturns. The total funding volume for the year stood at AUD $64.5 million, collected from approximately 35,000 investments.

Birchal continues to be a significant player in this domain, hosting 66 of the 99 campaigns and raising AUD $46.5 million from 27,000 investors. The next closest competitor raised AUD $8.2 million. Matt Vitale, Co-Founder and CEO of Birchal, underscored the importance of CSF. "The last financial year demonstrated remarkable resilience with equity crowdfunding levels remaining consistent with 2023, contributing AUD $64.5 million to the startup ecosystem," he stated.

Vitale noted the conservative nature of the investor market, influenced by rate rises and economic uncertainties, as reflected by smaller average deal sizes, which came in at AUD $661,000. "It's evident from the Funded Report that startups and SMEs play an essential role in driving economic growth; they are the lifeblood of Australia’s economic future," Vitale further commented.

The report also indicated that CSF outperformed new listings on the Australian Securities Exchange (ASX) for the second consecutive year, with only 56 ASX IPOs completed in FY24 compared to that of FY23. Vitale pointed out that the ongoing high inflation, interest rates, and cost-of-living pressures create a complicated economic landscape, making CSF a critical funding channel.

Birchal's report emphasised the role of regulatory mechanisms in providing startups and SMEs access to a broader investing public. “It is the only way early-stage businesses can make a regulated public offer of securities and gain unparalleled access to a potential investor pool of over 10 million Australians," Vitale explained. Approximately 130,000 Australians have already participated in CSF offers, showing the model's growing acceptance.

Dom Pym, Co-Founder of Up and Pin Payments, expressed optimism in the future of equity crowdfunding in Australia. "As an early investor in Birchal, I’m thrilled about the future of equity crowdfunding in Australia. With over AUD $211 million raised, Birchal stands as a cornerstone of financial infrastructure for our startup ecosystem," he said. Pym noted the returns seen in European markets, where platforms like Seedrs and Crowdcube have been operational for over a decade, which manifests the model’s efficacy.

FY24 saw evolving trends within CSF offers, with 46% of successful campaigns coming from companies reporting over AUD $1 million in revenue, marking an 8% increase from the previous year. There was also a notable rise in follow-on raises, comprising 28% of CSF deals.

The CSF industry reported a total funding volume of AUD $315 million across 427 CSF offers since its inception in 2018, with Birchal alone facilitating over AUD $211 million through 279 successful offers from 127,000 investments. Highlights from FY24 include significant contributions from the Food and Beverage, Healthcare, Sustainability, and Manufacturing sectors. The Food and Beverage sector led with AUD $19.7 million raised across 29 deals, representing 30% of total funding.

Regarding geographic activity, New South Wales saw a 14% increase in funding volume, totalling AUD $19 million, and a 32% increase in the number of campaigns. Victoria followed with a 19% rise in funding volume, accumulating AUD $21 million across 31 deals. Tasmania made a noticeable entry with AUD $8 million raised from three campaigns.

For the first time, the Funded report includes global commentary from other CSF intermediaries such as CrowdCube, Seedrs, DealMaker, and FrontFundr. This section aims to provide a broader perspective on the evolving trends and maturity levels of CSF markets worldwide.

The report offers a comprehensive overview of the current state of the CSF sector, illuminating the trends, areas of growth, and shifts that are shaping the future landscape of equity crowdfunding within and beyond Australian shores.