Notable exits across continents: Who's next in Australian Equity Crowdfunding?
With Australia's very first equity crowdfunded company IPO’ing a little more than a month ago, there has been a bit of buzz around the equity crowdfunding space. Jayrides spearheading of the first ‘successful’ public exit has potential to validate the form of capital raising and boost confidence in the industry.
We have decided to provide insight into the recent Australian exit, as well as show a few comparisons from around the globe:
Australia's first equity crowdfunding exit has been achieved by Jayride. Jayride is an aggregator platform that allows people to compare Airport transfer options, also allowing travellers to book before making the trip. The successful IPO has set a benchmark for the future of the Equity Crowdfunding industry in Australia. Still in its infancy, many questions still revolve around the legitimacy of the type of capital raise, and its ability to turn investors dollars into physical profits. The key metrics surrounding Jayrides successful raise and IPO include:
Jayride had two equity crowdfunding raises, with the first at $0.24 per share with a total of $665,000 being raised by the crowdfunding platform VentureCrowd.
The listing price of the IPO on the ASX was $0.50 per share, translating to a 108% gross return on the initial investment.
At the time of writing this article the share price of Jayride stands at $0.46, still a healthy 92% gross return since its final capital raise on the VentureCrowd platform in June last year.
Jayrides exit showcases the high capital growth potential for early stage investment in startups through crowdfunding. With liquidity risk being highlighted as a drawback of investing in public-unlisted companies, the first real tangible results from Jayride, proves that there is validity to the equity crowdfunding industry and process, and subsequent access to the potential high returns of investing in early stage ventures. With this listing being a first in Australian history, we set out to look back to the more mature crowdfunding industries in Europe and the UK to provide some insight into alternative exit options.
The UK’s first equity crowdfunding exit was done by E-Car Club through an acquisition by Europcar. E-Car Clubs business model is to provide an environmentally conscious alternative to the pay-as-you-go car hiring industry, through offering access to Electric and Hybrid cars.
The capital raise was hosted on one of the UK’s largest equity Crowdfunding website Crowdcube, with a total raise of £100,000. The business was snapped up by the car hire giant for an undisclosed amount, however investors have confirmed that they did receive a multiple of their initial investment amount (100% +). For us the most alarming statistic to come of E-Car Clubs successful exit was the recurring user numbers from the CrowdCube platform. A whopping 87.5% of E-Car club investors reinvested earnings into alternative projects hosted by the platform. This would suggest a satisfactory outcome for the majority of investors involved.
Company share buy-back:
Another exit coming out of the UK was through a company share buy-back, which saw investors receive significant returns on their money. Celixir, a biotech company that treats heart failure by regenerating cardiac muscle offered early investors 2.7x their initial investment which was snapped up by approximately 18% of equity crowdfunded investors, with the majority having faith in the company's projections and holding. Bearing in mind the time between the share buy-back, and the capital raise was approximately two and a half year, this is still, in our minds, a satisfactory outcome. Luke Lang, Crowdcubes co-founder labelled the share buy-back as "hard proof that crowdfunded companies can deliver healthy financial returns for their investors".
It certainly is exciting times for the equity crowdfunding industry in Australia. With its first successful exit through IPO and countless ventures being funded daily, we will hopefully see more similar exits on the horizon. The above also provides testament that there are multiple ways of producing a return other than publicly listing. With the Australian Crowdfunding industry on a steep growth trajectory, lets hope for more positive results of crowdfunding backed ventures in the near future.
It is always prudent to seek professional advice before making any investment decision, and as always be sure to read the offer document and do your due diligence before proceeding.