Sophisticated

Investor

Helping Fund Better

Funding Options

Our goal is to help companies do better, but when it comes to funding there are laws and regulations that need to be followed and this is where our guidance will help you achieve the best outcome. So we need to help you fund better.

There are two options that we can facilitate, Equity Crowdfunding and s708 (Wholesale) for sophisticated investors. Below we have outlined the key guidelines for both.

If you are considering raising capital, you will need to have an entity that is capable of receiving investment and managing the interests of the entity and the investors. The most common entities used for this purpose in Australia are companies incorporated under the Corporations Act 2001 (Cth) (the “Act”) and all references to legislation in this information are to the Act unless noted otherwise.

Once you have reviewed the information below, feel free to have a chat with us or get started by filling out our short questionnaire. Simply click the Funding Support button below.

EQUITY CROWDFUNDING (All Investors)

Equity Crowdfunding allows a broad group of investors to fund companies from startup to established businesses, in return for equity. There are too many benefits to list, but you must be prepared to have a larger shareholder base. The management of your shareholders isn’t such a big task with our free Cap Table / registry platform.

For Australian companies to qualify for Equity Crowdfunding, the following key criteria needs to be met:

  • Must be done via a licenced platform (FUNDSITION)
  • Companies can raise up to $5M per annum
  • Must be under $25m revenue and/or net tangible assets
  • Retail investors are limited to $10K per Offer company per annum
  • No limit for sophisticated investors
  • Foreign investment allowed
  • Can advertise
  • Two Director minimum and a majority Australian (if only two, then one must be Australian)

s708 (Sophisticated Investors)

Raising capital from investors in Australia generally requires that the company issuing securities prepare, lodge and distribute a disclosure document with any offer of securities (s706). However, there are exceptions and this information sets out the key points relating to the exceptions provided under s708.

This background information, which is general in nature and does not take your specific circumstances into account and is not to be construed as advice. We recommend that you speak with our key advisor to learn more or with your accountant.

The exemptions from the requirement to prepare a disclosure document allow a company to raise capital with reduced costs and regulatory burdens for capital raising activities that are generally accepted by the regulator as lower risk to the broader community.

s708 Guidelines

The following provides some guidelines around offering shares to investors, we have provided the most relevant and you can access the full guidelines by clicking here.

  1. Raising capital under s708(1) – Small Scale Offerings (20/12 rule)
    • If a company is planning to raise up to $2M from up to 20 investors in any rolling 12 month period, then it can do so under s708(1) without a disclosure document
    • The key limitations relating to an offer under s708(1) are that:
      • Each offer must be a “personal offer”, which means that:
        • It may only be accepted by the person to whom it is made
        • That person is associated with the company (limitations may apply), or has otherwise indicated that they might be interested in such an offer
      • The concept of a rolling 12 month period means any 12 month period
    • Please note that when counting the investors, and amounts raised, for the purposes of this section, investors to which another exemption applies are not counted toward the stated limits
    • This exemption has the broadest application as no other specific limitations apply to the investors to whom an offer of this kind can be made. However, other restrictions do apply and you should obtain financial and legal advice before raising funds under this section.
  2. Raising capital under s708(8) – Sophisticated Investors
    • If a company is planning to raise capital from “sophisticated investors” there are no upper limits on the amount of capital that can be raised, or the number of investors that can be offered securities (but please note that proprietary companies cannot have more than 50 non-employee shareholders)
    • However, the provisions of s708(8) impose strict rules about who a “sophisticated investor” is, including:
      • That an offer of securities with an amount payable of at least $500,000, will deem the relevant investor as sophisticated (s708(8)(a) or
      • That the aggregate amounts paid by an investor for securities in the same class are at least $500,000 on acceptance of an offer, will deem the relevant investor as sophisticated (s708(8)(b)) or
      • The investor provides the company with a certificate from a qualified accountant that was issued no more than 6 months prior to the offer is made to the investor that the investor has:
        • Assets of at least $2.5M or
        • Gross income for each of the last 2 financial years of at least $250,000
      • For the purposes of the item above, the offer can also be made to a company or trust controlled by a person who meets the requirements of the certificate discussed above

Click here to see the full guidelines


How can we help to make a difference

Learn about our wholesale platform