Crowd funding broadly encompasses schemes that seek to raise funds for projects and ‘start up’ companies through donations from internet users.
In return, crowd funding schemes may offer a variety of incentives to invest ranging from discounts and product samples to debt or equity interests in the business. While crowd funding is not specifically prohibited or legally regulated in Australia, a number of Australian technology start-up companies are urging the Australian Securities and Investments Commission (ASIC) to relax the current rules governing crowd funding, on the basis that the current rules were simply not designed with crowd funding in mind. To date, ASIC appears cautious that small investors may be scammed or burnt by crowd funded companies, particularly if it is extended to start-up companies in exchange for equity.
You can read a more detailed explanation of the Australian regulatory regime relevant to crowd funding here.
Thanks for giving more coverage to crowd funding, and how it can be used to assist startups and small business. As co-founder of Aus crowd funding site iPledg (http://ipledg.com/) we have been lobbying government to make change and to consider laws like the proposed JOBS Act in the USA, and we have been invited to Canberra to speak with the policy makers. Whilst we wait for changes to legislation, we offer the pledge-model of crowd funding as a successful and lawful way for commercial initiatives to raise funding to get off the ground
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