Australia should have a more flexible framework for crowd-sourced equity funding (CSEF) that enables micro-businesses and entrepreneurs to compete globally without being disadvantaged.
In its submission to the Federal Government’s discussion paper of potential CSEF models, Regional Development Australia (RDA) Sunshine Coast said the existing regulatory framework was not flexible enough for small start-ups and entrepreneurs to access necessary funding.
“Based on feedback received by RDA Sunshine Coast there is a need for CSEF to be available to the broader business sector however small business and start-ups should be a key focus of this review.
“We recommend that this area is considered in the final recommendations and that flexibility is built into the framework that allows for rapid crowdfunding systems using internet-based platforms,” RDA Sunshine Coast said in its submission.
“Disruptive technology has created opportunities that are available to start-ups and entrepreneurs in other countries which are not available to Australian companies. This has led to Australian companies taking their ideas overseas because they are at a major competitive disadvantage by being located in Australia.
“Other implications are the loss of Australian talent overseas and the loss of job opportunities for Australians.
“Access to equity is available globally now and Australian residents are able to fund international project overseas via mechanisms such as www.kickstarter.com and www.indigogo.com. These funds could have been available to Australian companies, however due to Australia’s regulatory limitations these funds are being spent overseas – this is an opportunity cost to Australia and is leading to more jobs and ideas being exported.”
RDA Sunshine Coast responded to the discussion paper which sought stakeholder feedback on characteristics of potential CSEF models as part of the government’s Industry Innovation and Competitiveness Agenda (Competitiveness Agenda) released in October 2014.