Careful research actually shows that Australia was probably the first place to trial ECf, although it wasn't called that then. The Australian Small Scale Offerings Board. ASSOB, has been going since 2007 and has raised over A$ 150m to date. Despite Oz's reputation as a pioneering, risk taking nation, they have viewed ECf with far more cautious eyes than some.
ASSOB, has many features which should be standard for ECf worldwide. Whilst it isn’t as active for start ups as some might wish, in principle it has far more about it that's right than wrong. It flies in the space between bank or major VC funding and the unregulated full ECf. Their model is worth visiting so another blog will cover this in more detail.
In New Zealand, they see things differently. Contrary to their reputation for being a rather conservative race, ECf rules are as lax here as they are anywhere on the planet. Platforms do have to be registered with the country's regulator, the FMA, but other than that its caveat emptor. The country currently has 6 registered platforms, one of which is an off shoot of Crowdcube in the UK. Activity on all sites is low, the Crowdcube site was until recently totally blank. It is just possible the true Kiwi nature is reflected in this rather than the regulation.
NZ's largest platform, Snowball Effect, which has been going for just over 15 months, has managed to complete 11 raises totalling just under £5m. It currently lists only 3 pitches. So compared to the UK's position, this is small fry.
Japan's first official outing into ECf is more P2P lending than equity investment. Crowdbank offers individual investors the chance to put their money onto a series of funds which then invest in projects with a suggested yield of 5%. More off radar P2P lending has been occurring in Japan for a while, growing organically, but pure ECf seems to be some way off. The potential is considerable when you consider that Japanese savers are sitting on an estimated $8.39 trillion – the largest pot in the world.
Malaysia joined the party in February 2015, when their SE passed 6 platforms as good to go with ECF. Various restrictions on investor amounts and annual raises are the only limitations and this looks very much like a WIP. Fundedbyme, a Scandanavian backed ECf platform, is a partner in one of the new six. Crowdplus, has been the first to launch at the end of November 2015. Unfortunately they may have gone a little early with only one rather weak looking pitch and a whole load of false information about the size of Crowdfuding worldwide, as if this had anything to do with Equity Crowdfunding. Not a great start.
South Korea passed a new Finance Act last summer which is due to be enacted January 2016. Whilst it sits at the cautious end of the spectrum, with strict limitations on the amount invested per company and per year, it is a start.
The Chinese government is very keen to somehow ease the strain on its SMEs and start ups, caused in large part by the Chinese banks’ refusal to lend to them. However the approach is currently a cautious one, with companies not allowed more than 200 investors. Investors must have at least 3m yuan in financial assets or 500,000 yuan in annual average income from the previous three years. How this is all verified is unclear
An interesting aspect of the government’s proposals for equity crowdfuding, which could be adopted everywhere, is the call for a central registry where information on companies and credit ratings can be easily accessed.
It has been estimated by the World Bank that China could account for half of the developing world’s crowdfunding by 2025. Feeling similar pressures to the UK Government in 2011, it is possible that China will relax its regulation to stimulate failing growth.
In the next part, we take a look at the US and Canada.