Crowdsourced funding in Australia holds steady in 2023

Despite an overall decline in major funding sources in Australia, the Crowd-Sourced Funding (CSF) regime held its ground in 2023, maintaining stable volumes and delivering $71 million to local businesses, according to a new industry report compiled by Birchal. The report analysed the performance of the CSF sector against a broader backdrop of sharper funding declines across the sphere of Venture Capital and ASX IPOs.

Specifically, $71 million was raised through 82 crowd-sourced funding offers in 2023, backed by over 35,000 investments. These results affirm that the stability of the CSF regime stands out, given prevailing financial uncertainties. Matt Vitale, Co-Founder and CEO Birchal emphasised, "CSF activity has remained stable, which is no small feat given the current funding environment and unrest in the wider financial system. It has been another solid performance for Australia's equity crowdfunding industry."

While the general growth was flat, the ability to maintain consistent funding levels underscore the potential of CSF as a steadfast source of capital for Australian startups under challenging conditions. Despite a turbulent financial atmosphere, Australians continued to invest in a diverse range of sectors encompassing Software, Financial Services, Technology, Transportation and Travel.

The top three industries for CSF investment were Food and Beverage with 24 successful campaigns raising a total of $21.6M accounting for 31% of the industry, followed by Healthcare landing $13.3M (19%) and Sustainability amassing $7.6M (11%). In 2023, Birchal, the leading CSF company, raised a sizeable $53M in funds from 29,000 investors over 57 successful offers.

An increased maturity within the CSF sector is reflected by the fact that 41% of all successful CSF offers in 2023 were from companies that had over $1M in reported revenue at the time of their offer, a striking comparison to only 16% in 2020. Additionally, a significant percentage (26%) of all successful CSF offers were generating positive earnings at their offer time in FY23, dwarfing the result of 12.5% in 2020.

Within the key demographics, Victoria led the regional CSF funds race, raising $22M across 23 deals (31% of all funds raised), followed by New South Wales with $19.7M (28% of all funds raised). Western Australia, marking the most impressive year on year increase, raised $16.8M across 15 deals, 24% of total funds raised and a stark 116% increase compared to the previous year.

Since its inception in 2018, the CSF regime has delivered $289 million to businesses across 380 successful CSF offers. Birchal alone facilitated over $196 million of this investment into startups and SMEs, through 249 successful CSF offers, bolstered by over 115 thousand investments. In a show of dominance, Birchal was responsible for 75% of all CSF funding volume in 2023, up by 8% from 2022, thus affirming its position as the clear market leader.

The CSF industry, in spite of major funding declines and an unpredictable financial ecosystem, has displayed noteworthy resilience, suggesting a bright future for equity crowdfunding in Australia.