Do You Want Funding For Your Business Or Invention?

Obtaining Funds For Your Latest Project, Startup or Invention

When we sit down with inventors and new clients, one of the recurring topics of discussion is funding. Have you acquired funding for your project? If not, how do you plan to obtain it?

There are several ways to obtain funding for the commercialisation of a product; crowd funding, investors and licensees, and government and institutional grants.

In Part 1 of our Funding Your Project series, we will cover the latest trend of raising equity capital, Crowd Funding.

What is Crowd-sourced Equity Funding?

Crowdfunding is the practice of funding a project or venture by raising small amounts of money from a large number of people.

Due to changes in the Corporations Act 2001, it is now possible for small to medium businesses to raise significant capital through equity-based crowd funding. Crowd-sourced funding allows start-ups and other small to medium sized companies to access up to $5M in capital in a 12-month period. The capital is raised by making an offer through an online platform operated by a service provider.

Offers must be comprehensive, but do not require the same level of detail as a prospectus. There are still regulatory requirements that must be met, but these have been relaxed compared to publicly listed companies.

The benefits of Crowd Funding

• More efficient than traditional fundraising.
• A place to build traction, social, proof, and validation.
• Direct feedback, from consumers to refine your idea before release.
• Gains you early adopters and loyal advocates.
• Doubles as marketing and media exposure.

Before you rush to your favourite crowd funding platform, note that the service provider must hold an Australian financial services (AFS) licence with an authorisation to provide a crowd-funding service.

It should be noted that there are other types of crowd funding available such as non-investment crowd-sourced funding which involves a down payment for goods or services or a donation.

Protect your IP before going public

It is important to ensure that prior to making any public offerings or any public disclosure, that your intellectual property (IP) is protected.

For products, this includes at least filing a provisional patent application and/or an application for a design registration.  Further IP costs can be covered by the capital raised through crowd sourced funding.