Already a subscriber?Retail investors in private companies have become desperate to get their money back but most never understood the risks of equity crowdfunding, Anna Ross, the founder of beauty empire Kester Black warns.
She ran a virtual crowdfunding capital raise in 2020 in which 1700 people – mostly customers – invested $2.3 million, many of them the minimum of $250. Others invested thousands of dollars. Four years on, she faced a dilemma as some investors became desperate to cash out, whether to pay school fees or meet their mortgage payments.. “I would get emails every year asking how much their shares were worth.
Ward says the platform could also help workers who have equity trapped in the growing pool of employee share schemes. More investors are turning to private markets than ever before. Fewer than 15 per cent of US companies with revenues over $100 million are listed while the total number of IPOs in Australia dropped by 54 per cent last year.Dr Zhong cautioned Labor against tightening the test for sophisticated investors, as Treasury considers whether to increase the threshold from $2.5 million in net assets to $4.5 million. Assistant Treasurer Stephen Jones says no decision has been reached.