I had the pleasure of interviewing Paul Niederer, CEO of ASSOB, the world’s largest equity crowdfunding platform. It’s available on YouTube here. Structuring the interview as a story, Paul and I walked through a crowdfunding lifecycle on ASSOB from cradle to grave, from the perspective of both the business and the investor. This was my first time interviewing via Google + so please forgive my redundancies and follies. Thankfully, Paul’s substantive responses more than made up for them.
The Australian Small Scale Offerings Board (ASSOB) is an equity crowdfunding platform that has successfully served both accredited and non-accredited investors since 2005, raising $130,409,669 since inception. 132 companies funded to date; 83% of which are still in operation; and not a single case of fraud. The absence of fraud is not by chance – it’s by design. A deeply qualified and experienced team at ASSOB has architected a system that shepherds businesses through the crowdfunding journey, compliantly and knowledgeably from cradle to grave.
It’s all weaved into the process. (i) Discovery: What are the implications of raising equity? Is ASSOB the right platform for my business? (ii) Offering Preparation: Cap tables, valuation, dilution analysis, and where do I even begin with the memorandum? (iii) Marketing: Most effective way to market my deal? How do I ensure my materials are fully compliant? (iv) Transaction: Shareholder agreements? Flow of funds? (v) Post-Investment: How often should I communicate with my investors? How about raising a follow-on round?
This is my own interpretation, and far from fully-encompassing, but it mirrors the general steps a business will take when using ASSOB. And with each step, they are surrounded by online, and offline, resources and assistance that speak to these types of questions. It’s an approach that couples carefully designed high-touch support with online efficiencies to achieve a crowdfunding model that works. To the tune of $130 million. And with that I’ll suspend my commentary, I suspect you’ll find my notes more useful : )
- Founded in 2005
- Equity-based platform; three-stage fundraising model (each stage held at different valuation)
- 176 pitches funded since inception
- 86% of companies funded still operational
- Subscribers have grown 26% annually, from 7,444 in 2005 to 23,859 in 2012
- Can raise between $50,000 – $5,000,000
- Regulations allow a maximum of 20 non-sophisticated investors in any 12-month period
- Wide range of businesses served, from seed to established, across most industry verticals
- Required to choose a “Sponsor” to help with the fundraising process (preparing documents, etc.)
- Average equity raised: $522,915; Average equity offered: 21%
- Democratized: all investors can participate, both accredited and non.
- Average number of investors: 14
- Average size of investment: $38,023
- High because of non-sophisticated investor limit (20)
- Business Model (ASSOB)
- $990 application fee
- $3,960 one-time admission fee; monthly maintenance fee of $458
- Success fee of ~1.5% of funds raised
- Services Ecosystem
- An ecosystem of professional service providers (“Sponsors”) that help guide businesses through the fundraising process
- Sponsor fees range, averaging ~$5,000
- ASSOB share of Sponsor fee is unknown
- Secondary Market
- Greater of $165 or 6.6% of share block sold
- Additional Resources