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Overview

Is Crowd Sourced Funding Right for Your Business?

Does your business need capital, and is crowd sourced funding actually the right way to get it?
We will give you a straight answer on that before we take the work. Lawnch has advised on CSF raises that succeeded and CSF raises that did not, and the difference is almost never the quality of the business. It is whether the company was ready, whether the offer was structured properly, and whether the market conditions were there.

Most firms have read the legislation. Few have run a raise.

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What crowd sourced funding is,
and when it works

Crowd sourced funding lets eligible unlisted public companies raise up to $5 million in any 12 month period from retail investors, through a licensed CSF intermediary platform. Retail investors can invest up to $10,000 per company per year.

It works when you have a consumer-facing brand with an existing audience, a story that a non-professional investor understands in 30 seconds, and the internal capacity to run what is effectively a marketing campaign alongside a capital raise.
It works badly when the business is complex, the customer base is other businesses, or the founders expected the platform to find the investors for them. The platform does not do that. You do.

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What we do on a CSF raise

Tell you whether to do it at all

We compare CSF against a sophisticated investor round, a convertible note, debt, and non-dilutive options including the R&D Tax Incentive. Sometimes CSF is clearly right. Often something else is cheaper and faster.

Get the company eligible

CSF requires an unlisted public company limited by shares with its principal place of business and majority of directors in Australia, and it brings governance obligations most private companies have never dealt with. Converting from a proprietary company is a process, and it needs to start early.

Prepare the CSF offer document

The offer document has prescribed content requirements and it is the document a regulator reads if anything goes wrong. It also has to be readable by someone who is not an investor by profession. Those two requirements pull against each other, which is the actual skill.

Intermediary selection and platform agreements

The licensed platforms differ on fees, audience, minimum raise, and how much of the campaign work they will carry. We review the platform agreement before you sign it.

Compliance through and after the raise

Corporations Act 2001 (Cth) obligations, the cooling off rights retail investors hold, communication restrictions during the offer, and the reporting and governance obligations that continue once you have several hundred new shareholders on the register.

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Other ways to raise

Lawnch advises across the full funding stack: conventional debt, equity, convertible notes and SAFE notes, all structured to comply with the Corporations Act 2001 (Cth) and to sit sensibly against current market conditions.

We are also registered tax agents with a dedicated R&D and grants practice, so before you dilute we will check what non-dilutive funding you are entitled to and not claiming.

Tammi and Ben, Lawnch Directors

Crowd sourced funding lawyers, Gold Coast and Australia

Lawnch has facilitated crowd sourced funding raises for businesses across the Gold Coast and Australia. If you are weighing up a CSF campaign, the most valuable hour you will spend is the one where somebody tells you honestly whether your business is suited to it.

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The Lawnch difference

What usually goes wrong

– You find out about the problem when it is already a problem

– The answer arrives four days after the deal needed it

– Advice comes as a list of considerations, not a decision

– You sign a document nobody walked you through

– The agreement does not survive its first real test

– The bill arrives with no relationship to the scope discussed

– Your lawyer knows the law but not your business

The Lawnch way

  • We work with you proactively to identify what you do not know yet
  • So quick to respond, we will be waiting on you
  • We tell you what we would do, and why
  • We workshop documents with you so you understand the implications
  • Every agreement is built for the raise, the dispute or the exit that will test it
  • Fixed scope agreed before we start
  • Our founders have built, run and exited companies of their own
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FAQs

Frequently Asked Questions

  • Crowd sourced funding is a regulated way for eligible unlisted public companies to raise up to $5 million in any 12 month period from retail investors through a licensed CSF intermediary platform. Retail investors are capped at $10,000 per company per year, and the raise is governed by the Corporations Act 2001 (Cth).

  • Yes. CSF has prescribed offer document content, company eligibility requirements, communication restrictions during the offer and continuing governance obligations, and errors in any of these can invalidate the raise or attract regulator attention. The platform is not your legal adviser.

  • You need to be an unlisted public company limited by shares, with your principal place of business in Australia and a majority of directors ordinarily resident here, and you must be under the $25 million gross assets and annual revenue caps. Most companies considering CSF start as proprietary companies and need to convert first, which takes time and should be planned early.

  • Costs come in three parts: legal and accounting to get the company eligible and the offer document prepared, the intermediary platform’s fee which is typically a percentage of funds raised, and the marketing spend to actually reach investors. The third is the one most founders underestimate.

  • It depends on your business. CSF suits consumer-facing companies with an existing audience and a simple story, and it doubles as a marketing exercise. A sophisticated or wholesale investor round is usually faster, cheaper and simpler for B2B or technically complex businesses, which is why we work through the comparison before recommending either.

  • If the minimum subscription is not reached the offer does not proceed and investor money is returned, and you have spent the legal, platform and marketing costs without raising capital. This is why the honest eligibility conversation happens before the campaign, not during it.

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