For years, Birchal has argued that small fixes to Australia’s crowdsourced funding regime could unlock enormous benefit for founders, investors, and Australia’s economy
The Ambitious Australia report released this week shows that the experts agree.
The question now is whether the government will listen.
There is a number in the Ambitious Australia report that should embarrass every policymaker in Canberra: $2.
That is how much Australians invested in crowdsourced funding (CSF) per capita in 2024, while in the United Kingdom, the equivalent figure was over $8. We are being outpaced four-to-one by a country that introduced its crowdfunding regime just a few years before we did.
The reason is not a lack of interest from Australian investors, it is the regulatory framework that has been largely frozen in place since 2017.
The Ambitious Australia: Strategic Examination of R&D Final Report, chaired by Robyn Denholm and released this week, challenges this inertia. For the first time, a government-commissioned expert panel has put crowdsourced funding reform squarely in its sights.
A structural, not cultural problem
Australia has immensely talented founders, motivated investors, and a genuine appetite for innovation. What we lack is a regulatory framework that connects one to the other.
Three structural problems stand out, and all three are identified in the report.
First, our current rules provide for extremely limited shareholder structures in CSF raises.
Every CSF investor must become an ordinary shareholder – their own line on the cap table – meaning that companies raising through CSF can end up with thousands of micro-shareholders on their cap table.
This creates an administrative burden for companies as well as investors, and the perception of a “messy cap table” that can stall future investment discussions. We’ve seen many founders who were genuinely excited about opening their business up for crowd investment be scared off by this structure.
Retail investors pay the price: missing out on some of the best investment opportunities.
In the UK, nominee structures are the norm for crowdfunding raises. A single entity holding shares on behalf of all of the micro-investors can amplify their collective voice and simplify governance on both sides.
This means that crowdfunding can become a strategic play for companies like Revolut, who is reportedly delivering a whopping 465x return to the CSF shareholders who backed it in its early days. An epic reward for backing an idea they believed in.
This feeds into the second structural barrier in Australia – which is the lack of a secondary market for retail investors. As a general rule, once someone invests through a CSF round their money is locked in until the company either goes public or is acquired – generally at least a decade away (if the company makes it that far).
Illiquidity is a real deterrent to investment, and it is entirely artificial. Australia’s licensing framework simply does not currently support a secondaries market for retail investors. New Zealand and the UK have fixed this. Australia has not.
Third, the wholesale investor rules arbitrarily impose a $10k limit on retail investors. There’s no such limit on gambling, and yet we restrict investors from backing Australian innovators because we think they can’t understand the risk? This is insulting to the thousands of retail investors who back innovation through the crowd each year.
Not radical reforms, just overdue ones
Let me make this clear from the outset – I am all for investor protections. I never want to see retail investors being fleeced of their hard-earned. My team goes above and beyond to ensure that companies raising on Birchal meet stringent disclosure requirements and limitations so that retail investors can make the most informed possible decision.
But the crowdsourced funding framework in its current form is broken, and it’s costing retail investors the opportunity to invest in Australia’s best and brightest innovators.
The reforms recommended in the Denholm report – and in Birchal’s own submission to ASIC’s Public and Private Market review last year – do not weaken the protections for retail investors.
Nominee structures, properly designed with a fiduciary obligation on the intermediary, actually strengthen investor rights by giving them a collective voice.
A secondary market with appropriate disclosure requirements gives investors optionality without removing their protections. Removing the investment cap simply brings Australia into line with every other comparable jurisdiction.
The broader point that matters
The Ambitious Australia report is not just a policy document. It is a genuine reckoning with what Australia needs to do to deliver prosperity over the next forty years. The panel is unambiguous: without bold reform to our innovation and investment ecosystem, future Australians will inherit a lower standard of living than we enjoy today.
Crowdsourced funding sits at the intersection of two of the report’s central ambitions: mobilising more private capital for innovation, and democratising access to that capital. When retail investors – not just wholesale investors and VCs – can back the next generation of Australian deeptech, medtech, and cleantech companies we get a richer, more resilient innovation ecosystem.
At Birchal, we have facilitated $240 million in investment into over 330 Australian companies.
The founders we work with are building real businesses in clean energy, health technology, food systems, and advanced manufacturing. Their investors are teachers, nurses, tradies, small business owners, and retirees – ordinary people who believe in these companies and deserve a chance to share in their success.
Australia has a once-in-a-generation opportunity to build a genuine innovation economy.
We should not squander it by leaving our most democratic investment channel tethered to decade-old rules.
- Kirstin Hunter is the CEO of equity crowdfunding platform Birchal.
