{"id":41279,"date":"2023-10-20T15:12:53","date_gmt":"2023-10-20T15:12:53","guid":{"rendered":"http:\/\/startupsmart.test\/2023\/10\/20\/labor-withdraws-support-for-crowdfunding-bill-as-startup-community-leaders-label-it-a-dead-duck-startupsmart\/"},"modified":"2023-10-20T15:12:53","modified_gmt":"2023-10-20T15:12:53","slug":"labor-withdraws-support-for-crowdfunding-bill-as-startup-community-leaders-label-it-a-dead-duck-startupsmart","status":"publish","type":"post","link":"https:\/\/www.startupsmart.com.au\/uncategorized\/labor-withdraws-support-for-crowdfunding-bill-as-startup-community-leaders-label-it-a-dead-duck-startupsmart\/","title":{"rendered":"Labor withdraws support for crowdfunding bill as startup community leaders label it a \u201cdead duck\u201d – StartupSmart"},"content":{"rendered":"
\"\"<\/div>\n

Labor will no longer support the government\u2019s equity crowdfunding legislation and has called a parliamentary inquest in response to backlash from the startup community, which says it has been dealt a \u201cgreat disservice\u201d by the bill.<\/p>\n

 <\/p>\n

The amendments were revealed on Thursday and confirm<\/a> that the funding option will only be available to public companies with turnover and assets of less than $5 million and a $10,000 cap will be placed on investors.<\/p>\n

 <\/p>\n

Shadow treasurer Chris Bowen and shadow parliamentary secretary for digital innovation and startups Ed Husic issued a joint statement on the bill.<\/p>\n

 <\/p>\n

\u201cThe self-proclaimed nimble and agile Abbott-Turnbull Government has waited until the very last day of Parliament in 2015 to sneak in its equity crowdfunding legislation,\u201d Bowen says.<\/p>\n

 <\/p>\n

\u201cThe release of the legislation confirms industry concerns that startups will be forced to wear high costs and red-tape if they want to use equity crowdfunding as a capital pathway for early stage innovation.\u201d<\/p>\n

 <\/p>\n

The opposition says it is a \u201cdemonstration of bad faith\u201d that the government didn\u2019t consult with them over the bill and they have been asked by the startup community to oppose it.<\/p>\n

 <\/p>\n

\u201cIt\u2019s of great disappointment to Labor that the Abbott-Turnbull government refused to share or discuss its draft laws before their introduction to Parliament today,\u201d Bowen says.<\/p>\n

 <\/p>\n

\u201cWhile we have been willing to work with the government; we are not willing to be accomplices in a Abbott-Turnbull government attempt to ram through laws so heavy with red-tape that it makes it less attractive to utilise equity crowdfunding.\u201d<\/p>\n

 <\/p>\n

The public limitation<\/b><\/p>\n

 <\/p>\n

The main concern over the bill is excluding proprietary companies from the equity crowdfunding process. Under the changes, a startup would have to go public in order to access the funding option, but will receive a number of compliance concessions to make up for this.<\/p>\n

 <\/p>\n

But VentureCrowd founder Tim Heasley says this process will still be costly and time-consuming for small startups.<\/p>\n

 <\/p>\n

\u201cThey\u2019re still forcing these companies to become public and still forcing them to jump through a number of hoops,\u201d he says.<\/p>\n

 <\/p>\n

\u201cThey talk about removing regulatory hurdles, but I would suggest this legislation in fact imposes a whole lot more.<\/p>\n

 <\/p>\n

\u201cThere\u2019s already a really good crowdfunding platform for public companies \u2013 it\u2019s called the ASX.\u201d<\/p>\n

 <\/p>\n

He says the bill is a \u201cdead duck\u201d.<\/p>\n

 <\/p>\n

\u201cI don\u2019t think it\u2019ll have any impact at all,\u201d Heasley says.<\/p>\n

 <\/p>\n

<\/i><\/p>\n

\u201cIt\u2019s a great shame and such a missed opportunity.\u201d<\/p>\n

 <\/p>\n

Protecting the investors<\/b><\/p>\n

 <\/p>\n

Chairman of the Crowdfunding Institute of Australia Matthew Pinter says the bill is focused on providing \u201csafeguards\u201d for investors.<\/p>\n

 <\/p>\n

\u201cIt was always going to be a compromise between a high cap and early-stage companies. This model is more focused on larger amounts of funding,\u201d Pinter tells StartupSmart.<\/i><\/p>\n

 <\/p>\n

\u201cFrom the startup perspective, limiting it to public companies will be a challenge. <\/i><\/p>\n


<\/i><\/p>\n

<\/i><\/p>\n

\u201cI\u2019m hopeful that the industry rises to that challenge and that co-operation between various funding avenues works well with this legislation.\u201d<\/p>\n

 <\/p>\n

These limitations will mean equity crowdfunding still won\u2019t be an option for early-stage Australian companies, Pinter says.<\/p>\n

 <\/p>\n

\u201cIt has to read as a let-down for people that had hopes of early-stage fundraising,\u201d Phe says.<\/p>\n

 <\/p>\n

\u201cCrowdfunding under this model is highly unlikely to be a first round funding exercise. If you don\u2019t have a corporate accountant and lawyer in the family and a fair bit of money then it\u2019s unlikely to happen.\u201d<\/p>\n

 <\/p>\n

A \u201cmissed opportunity\u201d<\/b><\/p>\n

 <\/p>\n

The reforms as a whole are a \u201cmissed opportunity\u201d, CrowdfundUP CEO Jack Quigley says.<\/p>\n

 <\/p>\n

\u201cIt is discouraging that the majority of the intended users of the legislation are excluded, particularly existing startups,\u201d Quigley says.<\/p>\n

 <\/p>\n

\u201cThe government is effectively placing unnecessary administration and compliance costs on startups to run a public company in order to access these funds.<\/p>\n

 <\/p>\n

\u201cRather than setting this in stone, the government should monitor the new legislation and crowdfunding activity to adjust as necessary.\u201d<\/p>\n

 <\/p>\n

 <\/p>\n

Do you know more on this story or have a tip of your own? Raising capital or launching a startup? Let us know. Follow StartupSmart on<\/i> Facebook<\/i>,<\/i> Twitter<\/i>, and<\/i> LinkedIn<\/i>.<\/i><\/p>\n","protected":false},"excerpt":{"rendered":"

Labor will no longer support the government\u2019s equity crowdfunding legislation and has called a parliamentary inquest in response to backlash<\/p>\n","protected":false},"author":2,"featured_media":60967,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/41279"}],"collection":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/comments?post=41279"}],"version-history":[{"count":0,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/41279\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media\/60967"}],"wp:attachment":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media?parent=41279"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/categories?post=41279"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/tags?post=41279"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}