Crowd sourced funding - non-investment and investment types
10 January 2020
Crowd-sourced funding (CSF) involves raising funds, usually via an online Intermediary.
A large number of people make relatively small financial contributions to your company.
And, there are 2 general types of crowd-sourced funding - non-investment and investment-based.
Below, we'll go through each.
Non-investment crowd-sourced funding
Non investment crowd sourced funding involves you receiving donations from participants that support your cause or pre-purchase a good or service that will be using the raised funds.
Investment-based crowdsourced funding
Investment-based crowdsourced funding involves participants investing money for a financial reward or gain.
Unlisted public companies and private companies with less than $25 m in assets and annual revenue can make offers of ordinary shares to retail clients with an Australian Financial Service (AFS) licensed CSF intermediary’s platform via a CSF offer document.
Eligible companies can raise up to $5m in any 12-month period under the CSF regime.
Corporations Act guidance
The Corporations Act has the regulatory framework for equity based crowd-sourced funding (investment based crowd sourced funding type).
Your company offers ordinary shares to investors for a small cash investment.
Do you have questions or comments about crowd sourced funding types? Be sure to leave them below.