Crowdfunding in Australia:
a Primer for Small Business Owners

Crowdfunding is an innovative financing method your business can use to pool money from a vast online audience.

Beyond funding, it offers marketing benefits, enhances brand visibility, and fosters customer relationships.

The rise of crowdfunding platforms

Crowdfunding in Australia has become more accessible thanks to platforms like Kickstarter, Indiegogo, and GoFundMe.

Catering to many sectors, including technology, arts, and social initiatives, these platforms provide secure payment options and increase project visibility.

Advantages of crowdfunding

Crowdfunding is not just about fundraising; it’s multifaceted, offering:

• Market Insight: Allows you to test the market and validate demand.
• Feedback Loop: Early adopters often provide valuable feedback.
• Community Engagement: Builds a loyal community around your project.
• Financial Safety: Secures funding upfront, reducing launch risks.
• Brand Exposure: Campaigns can attract media attention, build your brand and boost credibility.

Launching your Australian crowdfunding campaign

For successful crowdfunding in Australia, legal compliance is essential. Complying with ASIC regulations is imperative, especially for equity crowdfunding.

Understanding local legal nuance is equally important. It’s also important to understand the various crowdfunding models.

The small business law team at Ballantyne Law on the Gold Coast can help you navigate the requirements.

Crowdfunding models

• Reward-based: Offers products or services in exchange for funding.
• Equity-based: Provides backers with a stake in the company.
• Debt-based: Functions like a loan, where backers expect repayment with interest.

Designing an effective campaign

• Clarify value: Articulate why your project deserves support.
• Engage through content: Use videos and images to connect with potential backers.
• Be transparent: Outline your objectives, funding usage, and associated risks clearly.

Marketing & legal frameworks

Use social media and traditional media for promotion. Avoid misleading backers and make sure your campaign remains legally compliant, adhering to ASIC guidelines and Australian Consumer Law (ACL).

Post-campaign management

Build trust by maintaining your commitment to backers and keeping them informed about project progress. This also lays the foundation for future projects.

Legal crowdfunding in Australia

Crowdfunding campaigns need to comply with the regulations. Key areas to focus on:

ASIC regulations

• Equity crowdfunding: Your campaign needs to comply with ASIC’s regulations designed for unlisted public companies.
• Risk disclosure: Provide potential investors with detailed risk statements.
• Investment caps: Note the cap on retail investment in equity crowdfunding projects.

State-specific legalities

Consult with your small business lawyer to check for state-specific regulations that could impact your campaign, for example, legal requirements around consumer protection and financial reporting.

Australian Consumer Law (ACL) alignment

• Honesty is best policy: Avoid misleading or deceptive conduct in your crowdfunding campaign.
• Transparent descriptions: Ensure the accuracy of reward descriptions and project details.
• Consumer guarantees: Products need to meet quality standards and descriptions.

Handling complaints & refunds

• Set up a process: You need a clear process for handling complaints and you need to address them promptly.
• Refund policy: Backers are entitled to refunds, as dictated by ACL. Understand the relevant circumstances for refunds.

Getting started with your crowdfunding campaign

Crowdfunding in Australia is a dynamic path for business growth, blending financing with marketing and community building. Its success relies on careful planning, effective communication, and adherence to legal frameworks.

Professional guidance can increase your chances for crowdfunding success. Contact our small business law team, at Ballantyne Law on the Gold Coast.