The 2015 budget announcement that the government would fund ASIC to execute a framework around the burgeoning crowdsourcing movement will give rise to new SMSF investment opportunities, a sector expert has said.
As part of the small business package, revealed last Tuesday, the government would provide $7.8 million to the corporate watchdog over four years from 2015/16 to implement and monitor a regulatory framework to facilitate the use of crowdsourced equity funding, including simplified reporting and disclosure requirements.
NowInfinity principal Grant Abbott said businesses born out of crowdsourcing, also known as crowdfunding, presented exciting investment opportunities for SMSF trustees who were on the lookout for such options.
“I think it’s a great area going down the track, and it will be great for us in terms of SMSFs because more SMSFs are looking for those alternative-style investments,” Abbott said during his Australian 2015 Budget Rundown webinar last week.
“They might not invest a huge amount but if a couple of those investments work, you can really make a significant play.
“I just jumped on a site in the United Kingdom, registered and within five minutes I could be participating in funding for a business over in the UK.
“And I’ve had a look at them – they look like they’ve got great business plans and great set-ups – so effectively you commit to putting in x amount of dollars.
“Also, there are great tax incentives from the government for crowdfunding,” he added.
But Abbott questioned ASIC’s ability to deliver the framework within the allocated time and budget.
“Why don’t they simply outsource it or take [on] the UK fundamentals [of crowdsourcing]?” he said.
“Otherwise everyone will end up offshore.”
The budget papers said crowdsourcing was an emerging form of equity funding that allowed entrepreneurs to raise money online from a large number of small investors, and that it had the potential to increase funding options to assist in the development of business propositions.
