What will you be speaking about at the Hunter Innovation Festival breakfast on June 14?
I’ll be spreading the word about crowdfunding Innovation. Our research has shown that very few people are aware of crowdfunding, the opportunity and risks involved. Online crowdfunding is a great way to test market, find customers and launch a business, though it’s not easy. I’ll be sharing insights into that journey, the type of skills and approaches that have worked and be frank about the risk to all parties.
What are key issues facing the sector?
A little startup from Byron Bay called Flow honey raised over $12 million in pre-sales via a US platform, setting a new record. That result was outstanding and talks to the explosive potential that crowdfunding can offer to innovative small business.Matthew Pinter
Crowdfunding is a misunderstood term that is often applied to many different types business and non-business activity, as such education is the single biggest issue. As people understand the legal and practical processes behind the various forms of funding, ‘the crowd’, platforms and regulators will align within crowdfunding. Crowdfunding, like Wikipedia, Uber and Airbnb is a type of sharing, except this method involves shared knowledge, analysis and commitment. It’s pretty clear that Australian crowdfunding needs a boost from our regulators, particularly in the area of equity investment.
As a business broker and chartered accountant, why did you join the Crowd Funding Institute of Australia?
Two aspects: firstly my involvement as a backer and campaigner on charitable funding (well before it was called crowdfunding); and secondly, through identification of the funding gap for startups (well before it was politically expedient). As a self-employed angel investor, I’m very keen to see startups given a go.
What is the institute’s mission?
The institute is not for profit, run by volunteers – fortunately crowdfunding attracts highly motivated, skilled and resourceful people – and our mission is to advance crowdfunding in all forms throughout Australia, be that via education, research, training, government liaison...right through to joining the crowd that rallies behind you! We’ve helped draft Corporations Law amendments, ATO guidelines, state and federal advisor training, and much more. Our membership has grown to over 5000, with most of the major Australian crowdfunding platforms playing an important role.
What’s the best-case scenario for crowdfunding?
A little startup from Byron Bay called flow honey raised over $12 million in pre-sales via a US platform, setting a new record. It was pretty obvious to us that they would run a successful campaign, however that result was outstanding and talks to the explosive potential that crowdfunding can offer to innovative small business across the world.
What platforms do you consider competitive?
It’s a really important question, as most people jump to the assumption that US platforms are the best choice, however this is often not the case. Crowdfunding on Australian platforms like Chuffed, Pozible, Startsomegood, Ozcrowd, Crowdfundup, Domacom, Mycause or Lawfunder can, depending on your category, give you a distinct advantage. Kickstarter is excellent for tech gadgets, however the statistics show that theatrical releases in AUD are much better off on Pozible as one of many good examples.
How easy it is for an individual to crowdfund?
It’s not easy! Crowdfunding takes months of preparation, the right campaign, timing and platform selection. You have a huge audience, but everyone has a microphone. Fortunately, a lot of what is needed for successful crowdfunding is also part of running a successful business, so its worth getting involved, if you’re a startup or multinational. Did you know Sony, IBM and other corporates use crowdfunding?
How much protection is afforded to investors?
I'm guessing you are referring to pre-purchase (rewards) crowdfunding. Pre-purchase campaigns typically offer an immediate refund if the minimum target isn't met. This is supposed to give the customer confidence that the business has sufficient funding to deliver.
Thereafter the vendor, who has legally committed to deliver the pre-purchase or reward, must often overcome serious obstacles that were unknown at the onset, e.g. manufacturing delays. Sometimes the campaign was over ambitious or poorly executed, or sometimes the contingent events overrun the business before backers get what they paid for. In that event the business is likely to be broke and not even able to offer refund.
While heavily associated with the arts and education, is crowdfunding moving into new sectors?
Debt, invoice factoring, litigation funding, real-estate funding, celebrity-sport star funding, donations, community projects and infrastructure funding.
Tickets to Hunter Innovation Festival’s launch breakfast via Sticky Tickets.