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Crowd sourced funding - non-investment and investment types

10 January 2020

Crowd-sourced funding (CSF) involves raising funds, usually via an online Intermediary. 

How?

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. 


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Vivian Michael
 

Vivian Michael is a lawyer and founder of Michael Law Group. Vivian's mission is to deliver the best quality business legal services to entrepreneurs launching an Australian business, wherever they are in the globe.

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