Australia’s new retail equity crowdfunding market will kick off as early as next month, with news that start-up digital bank Xinja will launch an offer of shares on the Equitise platform.
Xinja is in the process of raising $10 million to $15 million of venture capital to get its business off the ground and will use Equitise to raise at least $500,000 from retail investors.
Investors will be able to use the Equitise platform to invest as little as $1000 in Xinja.
The new retail equity crowdfunding regime came into force at the end of September, when the market was opened up to small investors who are able to invest up to $10,000 per company per year via an intermediary platform.
Unlisted public companies can use crowdfunding platforms to raise up to $5 million a year by issuing ordinary shares. To be eligible they must have less than $25 million in assets and annual revenue.
Investor protections include a 48-hour cooling-off period, a prohibition on offers of financial assistance to enable investments in offers, and a requirement to obtain a risk acknowledgment prior to accepting an application.
Platforms can only be operated by licensed intermediaries that have specific authorisation to provide a crowdfunding service.
Equitise co-founder Chris Gilbert says the company has made its licence application and expects to have the process completed in November.
Equitise was launched in New Zealand a couple of years ago. It has completed 27 capital raisings and has about 30,000 investors on its platform.
Platform providers must act as “gatekeepers” – checking company details and investment information before placing the offer on the platform.
Gilbert says the venture capital investment in Xinja will give retail investors confidence that larger investors see merit in Xinja’s business model.
Xinja’s plan is to be a digital-only bank providing a range of retail services. Its plan is to compete on rates and fees. It has applied for a licence to operate as an authorised deposit taking institution and hopes to have its first product in the market early next year.