Of the total 426 successful offers, this represents an average valuation of $13.6 million. Virtual aims to dispel negative perceptions about the fundraising channel, such as the myths that “it’s a signal you can’t raise anywhere else” or “CSF is only for private investors”.
This market capitalization represents a significant 39% increase over 12 months, an increase that can only be explained by the increase in sample size.
Business News Australia asked Birchall to clarify which companies were driving the surge in valuations. The top third of CSF offerings in FY24 are understood to have been raised at an average pre-money valuation of $18.2 million, which would suggest the largest recent fundraisers have been valued at around $600 million.
According to Virtual’s Funded report, CSF funding remained stable at $64.5 million across all platforms in FY24, while the number of funding rounds increased 16 percent to 99.
As a result, the average amount raised fell to $66,100 from the historical average of $738,000. The report’s authors explain this reflects a conservative investor market supported by rising interest rates and general economic uncertainty. Only four startups reached their maximum fundraising goal in FY24, and 17% of CSF deals exceeded $1 million.
Since its inception in 2018, CSF rounds have raised more than $3 million with 78 follow-on offers, the most prominent type of CSF procurement in FY24, accounting for 28% of the total.
“Last year showed incredible resilience, with equity crowdfunding levels remaining at par with 2023 and contributing $64.5 million to the startup ecosystem,” said Matt Vitale, co-founder and CEO of Birchall.
“Despite the challenging fundraising environment, the number of companies using CSFs has increased by 16% compared to FY23, indicating that CSFs are increasingly being recognised as an efficient method of raising funds.”
Mr Vitale said the report made it clear that start-ups and small businesses played a vital role in driving economic growth as “the future lifeblood of the Australian economy”.
“The proposed changes to the wholesale investor test and the skilled investor test have the potential to narrow the pool of investors available to invest in startups, impacting both investors and the availability of capital for startups and SMEs. The economic landscape is complicated by persistently high inflation, interest rate and cost of living pressures,” he said.
“The CSF regime appears to be a key part of the answer – it is the only way early stage companies can make a regulated public offering of securities and gain unparalleled access to a potential investor pool of over 10 million Australians.”
“The Australian CSF industry is seeing rapid market penetration with approximately 130,000 Australians already participating in CSF offerings. As other pools of capital shrink, the opportunity to aggregate them into a proven, regulated and scalable mechanism like CSFs is attractive.”
Food and beverage was the top performer for the third consecutive year, raising $19.7 million across 29 deals, accounting for nearly a third of all funding. This category was followed by healthcare, with medical cannabis businesses again accounting for $14.2 million, followed by sustainability at $8.1 million and manufacturing at $4 million.
Tasmania’s Hellyers Road raised $4.38 million via OnMarket, which is reportedly the largest CSF alcohol raise in Australian history, while medicinal cannabis company Cannaponix has raised a total of $6.9 million over two raises in 2023 and 2024, the largest CSF raise ever.
The report addresses the common misconception that crowdfunding is only for retail investors, noting that some of Australia’s most prominent investors and funds have backed crowdfunded companies before, during and after their crowdfunding round, including SquarePeg, AirTree, Skip Capital, Euphemia, Antler, NAB Ventures, AfterWork Ventures and Artesian.
“As a virtual early stage investor, I’m excited about the future of equity crowdfunding in Australia,” said Dom Pym, co-founder of Up & Pin Payments and family office Euphemia.
“Having raised over $2 million, Birchal has become a cornerstone of the financial infrastructure for our startup ecosystem. I support and invest in companies like Birchal that elevate the startup ecosystem and position us as a global leader.”
“The data from Birchall’s latest industry report highlights the power of CSF to provide critical capital to innovative startups that may not otherwise be accessible to investors.
“The returns we’ve seen in European markets, where platforms such as Seedrs and Crowdcube have been active for more than a decade, highlight the effectiveness of CSFs as a fundraising model. We’re excited to see what Birchal can bring to the Australian economy as the fundraising market matures over the coming years.”
Birchall also points out signs that the CSF industry is maturing: About 46% of successful offers were made by companies with more than $1 million in reported revenue, representing an 8% increase.
Looking at quarterly performance, Q1 and Q2 were strong compared to FY23, with fundraising volumes up more than 20% in the first half, but softer results in Q3 and Q4 eroded these gains.
Interestingly, successful CSF offerings have outnumbered ASX new listings for the second year in a row, with just 56 ASX initial public offerings (IPOs) completed in FY24.
Highest salary increase in FY24 CSF
https://www.businessnewsaustralia.com/1. Hellyer’s Road – https://www.businessnewsaustralia.com/$4.4 million from 1,338 investors (OnMarket)
2. Medigrowth – Raised $3.5M from 2,047 investors (virtual)
3. Naked Life Spirits – Raised $3 million from 935 investors (virtual)
4. Hydrowood Holdings – Raised $2.4 million from 668 investors (OnMarket)
5. Virtual – Raise $2.4 million from over 1,149 investors in December 2023 (Virtual)
6. Filter Brewing – Raised $2.2 million from 1,296 investors in November 2023 (virtual)
7. Cannaponics – From $1,326 to $1.9M by November 2023 (Virtual)
8. X-Hemp – Raised $1.5 million from 962 investors in October 2023 (Birchal)
9. Medican – $1.5 million (virtual) from 1,170 investors in October 2023
https://www.businessnewsaustralia.com/10. CrowdProperty – Raised $1.4M from 256 investors in July 2023 (Birchal)
