Australian crowdfunding rules need to change, says Ingogo

Ingogo founder Hamish Petrie says more Australians should have the chance to invest in startups

More Australians should be encouraged to take a punt on a startup by changing equity-based crowdfunding rules, according to Ingogo managing director and founder Hamish Petrie.

Speaking at a KPMG Australia event, Petrie said Australians spend approximately $20 million on gambling every year.

“We won’t let people take a bet on an early stage company through crowdfunding. It doesn’t make sense,” he said.

Under current Australian law, equity-based crowdfunding is only available to sophisticated investors.

They must earn $250,000 gross salary over two years or have $2.5 million in net assets.

According to Petrie, there are funding gaps for startups that don’t have a track record of building a business. Widening equity-based crowdfunding to more Australians could help these startups, he said.

“In our last capital raising, we raised $10 million which for an early stage business is a lot of money. $1.2 million of that came from crowdfunding,” he said.

Communications minister Malcolm Turnbull has thrown his support behind changing crowdfunding legislation.

In February 2014, he posted a blog which said the government “is determined to see” if it can match the regulatory environment that’s present in the US, here in Australia.

There was also discussion about corporates investing in startups at today's event.

Artesian Ventures Partners managing partner Jeremy Colless said that corporates are starting to building their own startup accelerators.

For example, Telstra has established muru-D and the NRMA has its Jumpstart accelerator program.

However, the problem is that venture capital is being disrupted because there are so many startups, he said.

“When there are thousands of startups, it is very hard for a traditional venture capitalist to go out and see that many companies,” said Colless.

According to Colless, for every 10,000 startups that emerge, only 50 turn into a scalable business that will head for an IPO.

“We need to see more money flowing into the bottom end, lots of small investments and building a large base. Instead of one Atlassian, hopefully we’ll get 10 Atlassians over a period of time,” he said.

Follow Hamish Barwick on Twitter: @HamishBarwick

Follow Computerworld Australia on Twitter: @ComputerworldAU, or take part in the Computerworld conversation on LinkedIn: Computerworld Australia

Join the TechWorld newsletter!

Error: Please check your email address.

Tags ingogostartupsMalcolm TurnbullkpmgcrowdfundingStartup

More about AtlassianKPMG

Show Comments

Market Place