Crowd sourced funding - non-investment and investment types
29 January 2021
Crowd-sourced funding (CSF) involves raising funds, usually through an online intermediary (a middle person).
A large number of people make small financial contributions to your company.
And, there are 2 types of crowd-sourced funding - non-investment and investment-based.
Below is an overview of 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.