Crowdfunders arrive from US
Indiegogo is counting on its Australian currency feature, to be launched on Tuesday, to give it the edge with local entrepreneurs. By allowing projects to raise funds in Australian dollars, Indiegogo cuts risk and cost from foreign exchange fluctuations and repatriation. Until now, money raised through offshore crowdfunding was in US dollars.
Co-founder Danae Ringelmann, in Australia this week to meet start-ups in Brisbane, Sydney and Melbourne, says her platform is attractive for Australian start-ups seeking to take their funding global.
"Australia has been such a strong market for us since day one," Ringelmann says. "We're trying to build a global ecosystem where people are bringing their ideas to life."
Indiegogo and Kickstarter are the top global crowdfunding platforms linking individual financial backers to start-up entrepreneurs, and taking a commission. Crowdfunding is becoming a popular way for innovators to get their ideas off the ground.
Industry analyst Massolution predicts crowdfunding to raise $US5.1 billion ($5.3 billion) globally in 2013, nearly doubling 2012's $US2.7 billion.
However, watchdogs say crowdfunding does not create a supplier-consumer relationship. NSW Fair Trading cautions those using crowdfunding sites to seek independent legal advice.
Ringelmann says Indiegogo has hosted 150,000 projects and supports up to 8000 to raise "several millions of dollars" a week simultaneously. She cites the Indiegogo fund-raiser for a campaign to get federal Communications Minister Malcolm Turnbull to reverse Coalition policy on the NBN as an example of a successful project. The campaign ended on the weekend raising four times its $15,000 goal to buy ads in Mr Turnbull's local newspaper.
While US crowdfunders are coming Down Under, Australian platform Pozible is tackling them on their home soil, opening a San Francisco office in August. Pozible co-founder Rick Chen says the Americans' arrival is good for Australian start-ups because it raises the general awareness of crowdfunding.
Chen says Pozible has helped fund 4500 projects since it launched in May 2010. He says it is less risky than US platforms being based here.
Pozible announced on Monday it will accept donations in Bitcoins.
Serial entrepreneur Matt Barrie says the shine on Australia's technology industry extends beyond start-ups to later-stage ventures.
Barrie just saw his first company, networking security maker Sensory Networks, sold to Intel for $21.5 million.
"What is quite interesting is once you're doing $10 million in revenue, there's a very active international private equity, late-stage venture capital community that is actively prospecting in Australia," Barrie says.
He points to Accel Partners, one of Facebook's first investors, as being active here since it invested $US60 million in Sydney software tools maker Atlassian. Other US venture capitalists such as Sequoia Capital (Apple, Google), Insight Venture Partners (Twitter), and Summit Partners (McAfee) were also busy in Australia this year.
Frequently Asked Questions about this Article…
The arrival of US crowdfunding platforms like Kickstarter and Indiegogo in Australia highlights the global confidence in Australian innovation. These platforms aim to increase the number of local start-ups taking their ideas to the world, providing them with more opportunities to secure funding and gain international exposure.
Indiegogo's Australian currency feature allows projects to raise funds in Australian dollars, reducing the risk and cost associated with foreign exchange fluctuations and repatriation. This makes it more attractive for local entrepreneurs who want to take their funding global without the added financial complexities.
Crowdfunding is becoming popular because it connects individual financial backers with start-up entrepreneurs, providing a platform for innovators to get their ideas off the ground. It offers an alternative to traditional funding methods and can help raise significant amounts of money quickly.
One successful example of a crowdfunding campaign on Indiegogo is the fund-raiser aimed at reversing Coalition policy on the NBN, which raised four times its $15,000 goal. This demonstrates the platform's ability to support impactful projects and engage a wide audience.
Pozible is competing with US platforms by expanding its presence to the US, opening a San Francisco office. This move aims to increase awareness of crowdfunding and provide a local option for Australian start-ups, which Pozible claims is less risky due to its local base.
Pozible has announced that it will now accept donations in Bitcoins, providing an additional payment option for backers and potentially attracting a new segment of tech-savvy investors interested in using cryptocurrency.
Australia's technology industry is attracting international investment due to its strong performance in both start-ups and later-stage ventures. With companies like Sensory Networks being sold to Intel and significant investments from firms like Accel Partners, the industry is gaining attention from global private equity and venture capital communities.
NSW Fair Trading advises individuals using crowdfunding platforms to seek independent legal advice. This is important because crowdfunding does not create a traditional supplier-consumer relationship, and understanding the legal implications can help protect both backers and entrepreneurs.
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