Australia’s crowd sourced funding industry has launched into 2022 with unprecedented funding volumes for the 3 months to 31 March, traditionally the CSF industry’s quietest period. Total funding volumes exceeded $10m, an 89% rise on the same period last year.
This performance sits in stark contrast to the sluggish start for the broader equity capital markets, which according to data published by Refinitiv and reported by the Annual Financial Review, experienced a 58% decline in funding volumes for the 3 months to 31 March 2022.
Who were the headliners for the industry?
Birchal led the charge for crowd sourced funding CSF, hosting seven of the 10 successfully completed deals, raising over $8.7m, or 88% of all funding volumes through CSF for the quarter. Notably, five of Birchal’s seven successful CSF offers were follow-on offers for companies that have previously raised through CSF, with an average uplift in value of 269%.
Some standout performances on the Birchal platform included:
- Independent Gold Coast brewer, Black Hops’ return to Birchal after its first successful CSF offer in January 2019 (where it reached its maximum target of $400k in six days, at a pre-money valuation of $18m). Black Hops raised its maximum target of $2.2m at a pre-money valuation of approximately $65m, representing a valuation uplift of 261%.
- Torquay-based adventure apparel brand, Zorali, also returned to Birchal for a second time after completing its first successful CSF offer in 2019 (where it reached its maximum target of $300k). Zorali raised its maximum target of $1.2m at a pre-money valuation of $12.25m, representing a 665% uplift in value from its first CSF offer in 2019.
- Much-loved hot sauce brand Bunsters also returned to Birchal for a follow-on CSF offer, after completing its first successful CSF offer in 2020. The company achieved its target of $1.125m in one day, supported by over 650 investors at a pre-money valuation of $31.4m, representing a 351% uplift in value from its first CSF offer in August 2020.
“CSF investors that backed these companies have achieved growth in the value of their investments (albeit on paper at this stage). This shows that businesses who have raised earlier rounds through CSF have been executing well, and driving growth in their businesses and their investors’ portfolios,” said Matt Vitale, Birchal’s co-founder and Managing Director.
“Black Hops reported revenue of approx. $1.4m at the time of their first CSF offer in January 2019. Black Hops’ revenue for the 2021 financial year exceeded $13.5m, and at the time of their offer presented revenue of over $8.5m for the six months to 31 December 2021.”
What were the other outstanding cameos?
Other strong performances included Australian Honey Ventures’ second CSF offer raising just over $2m at a pre-money valuation of $22.17m (44% valuation uplift); and sports hydration company, PREPD which raised $712k on its second CSF offer (24% valuation uplift).
Other successful Birchal campaigns completed in the quarter included Sneaker Laundry ($900k) and Cassava Bags ($596k). The outlook for CSF for the remainder of FY22 remains positive. Three offers are currently live on the Birchal platform, and past their minimum funding targets including Make-Out Meals, Yondr Money and Pokit Innovations.
Seven companies are accepting expressions of interest, expected to open their CSF offers, including Birchal which is preparing to host its own CSF offer on the Birchal platform.
“The CSF industry continues to go from strength to strength. Total funding volumes for the financial year to date exceed $57m across 65 successful CSF offers, approximately double the total funding volume of $28.4m at this time last year,” said Matt Vitale.
“CSF has fast become an effective mechanism for companies to raise capital from their most passionate fans. As we’ve seen this quarter, more and more companies are creating value and returning to use the CSF regime to fund their next stage of growth. We look forward to another quarter of strong growth to cap off a successful financial year for the industry.”
ASIC recently described the CSF regime as providing a “… robust alternative for smaller firms to raise up to $5m in 12 months with appropriate investor protection features.” and noting that the CSF regime “appears to be operating efficiently and reliance on the regime appears to be increasing”, providing an effective way to raise funds with investor protections.
The robust quarterly report card for the Crowd Sourced Funding (CSF) industry occurs at the same time that Birchal’s own public offering went live on 12 April 2022.
The funds raised will go towards building Australia’s first equity crowdfunding ecosystem. This move will establish SMEs and Startups as a mainstream asset class and will facilitate secondary trading and best in class stakeholder engagement, features that will attract even more retail and sophisticated investors to Australia’s exciting startup landscape.