How Can Crowdfunding Help Entrepreneurs?
Fundraising through Billfolda
Billfolda offers fundraising services via a public licenced service for Crowd Sourced Funding (CSF) and a private exempt service. Both are caped to 5 million dollars fundraising.
CSF is better known as equity crowdfunding, the online offer of securities investment. Because equity crowdfunding involves investment into a commercial enterprise, it is subject to securities and financial regulation. Substantial exemptions apply when compared to a typical Initial public offer (IPO), though readers must note that ‘rewards / pre-purchase’ crowdfunding and CSF maintain few parallels for the offer company.
What are the eligibility requirements for CSF?
The Corporations Act 2001 (Cth) prescribes detailed obligations for a company making an offer via the CSF regime, not the least of which is to be a Public, unlisted entity.
A Public company can have more than 50 shareholders, has a registered office, an auditor, a company secretary and at least 3 directors, 2 of whom must ordinarily reside within Australia.
Your lawyers and accountants should advise you further in these regards.
Eligible CSF offers can only be made by smaller public companies, i.e. those that have not listed and have turnover and assets of less than $25 million (inc related parties) prior to fundraising.
What type of shares can be offered and to whom?
CSF offers are restricted to Ordinary voting shares* for now.
Holders of ordinary shares are entitled to one vote per share, and do not have any predetermined dividend amounts. An ordinary share represents equity ownership in a company proportionally with all other ordinary shareholders, according to their percentage ownership in the company.
Private company offers are confined to exempt investors, family, employees and associates, with investment restricted to 50 members in aggregate with few exceptions.
Billfolda CSF offers are available to the public allowing investment by any number of investors, only capped by the total fundraising limit per annum.
*Importantly, the company can have other types of shares, and other (exempt) offers, however it cannot make those offers via CSF.
If my company is an eligible CSF company, what else do I need for Billfolda make an offer to its members?
Upon completion of the hosting agreement, Billfolda may provide you with a checklist, timeline and access to the Billfolda software, to confirm eligibility, develop your offer, undertake the book build, launch and manage the offer.
We do not provide a pitch or product development service and instead request that an early or leading investor approach us with a view to progress the company’s next funding round.
We do this, as the current CSF regime is not suitable for pre-seed funding rounds.
What does Billfolda do to assist with our CSF offer?
Issuers are given access to the Billfolda web application, a fully customised fundraising engine to power a compliant and flexible CSF offer.
Issuers have administration rights and privileges within a secure offer process that provides for intimate collaboration, section by section, user by user controls over every aspect of the offer, investor forum and investment.
Through our drop and drag interface you can quickly present, confirm and publish ‘coming soon’, ‘Offer’ and ‘Post offer’ releases with ease.
Billfolda admin is provided with a dedicated account manager, on-platform communications and enhanced fundraising tools that far exceed benchmark.
What does Billfolda charge to make an offer under CSF?
Billfolda flat % fee vary from issuer to issuer due to the work required. Out of pocket expenses will be recharged to the issuer without mark-up.
Issuers are required to budget for their own legal and accountants costs in assisting with the preparation and fulfilment of the offer.
Billfolda will accept payment in kind, via the same class of equities that Billfolda members receive. This means that the dilution of existing shareholders will increase, though you will keep the value in cash upon successful conclusion of the offer.
Fees payable to Billfolda (and not pass through third-party fees) are contingent, this means we will not be eligible for remuneration until the offer is closed.
Using the Billfolda introduction service does not preclude you from other concurrent funding rounds, provided that are not also made via the CSF regime (which would be illegal). However, as a consequence, and in recognition of the public promotional service we offer, you must agree to pay our fee, or the agreed proportion of our fee, on other funds raised throughout the contractual period (excluding any amount via written agreement). For the avoidance of doubt, those fees are payable, even when the payment has not been processed by Billfolda.
Where can I find more information about fundraising through Billfolda?
The financial services offered by Billfolda are described in detail in our financial services guide (FSG), a link to which is contained in the footer in our website.
In addition we strongly recommend that all applicant issuers review and apply RG261 Crowd Sourced Funding: Guide for Companies. That guide explains when a public company is eligible to make an offer of shares under the crowd-sourced funding (CSF) regime in the Corporations Act and what obligations, including disclosure obligations, apply. This guide also explains the temporary concessions available to public companies making CSF offers from certain reporting, audit and corporate governance requirements that would usually apply to public companies.
I am ready to proceed, who do I contact?
Email to [email protected] and include your contact details, the ACN off the issuer, your cap table and a current draft of your offer documentation.