Equity Crowdfunding in Australia: How CSF Works and Whether It's Right for Your Startup

Most founders thinking about raising capital default to the same playbook: angel investors, venture capital, maybe a convertible note from someone they know. But there’s another option that’s been available in Australia since 2017 — and since late 2018, it’s been open to proprietary companies too.

Equity crowdfunding, formally known as crowd-sourced funding (CSF) under Part 6D.3A of the Corporations Act 2001 (Cth), allows eligible companies to raise money by offering shares to the public through a licensed online platform. Instead of pitching to a handful of institutional investors, you’re pitching to hundreds or thousands of retail investors who each invest relatively small amounts.

It’s not the right fit for every startup. But for companies with strong consumer brands, engaged communities, or a story that resonates beyond the usual VC circles, it can be a genuinely useful tool. Here’s how it works.

The Legal Framework

The CSF regime was introduced by the Corporations Amendment (Crowd-sourced Funding) Act 2017, which took effect on 29 September 2017. Initially, it was limited to unlisted public companies. The Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Act 2018 extended the regime to eligible proprietary companies from 19 October 2018 — a significant change, since most Australian startups are structured as proprietary companies.

The key rules are:

• Fundraising cap. You can raise up to $5 million in any 12-month period through CSF offers.
• Eligibility. The company must have less than $25 million in consolidated gross assets and less than $25 million in annual revenue. Australia must be the company’s principal place of business, and a majority of directors must reside in Australia.
• Investor cap. Retail investors can invest a maximum of $10,000 per company in any 12-month period. There’s no cap for sophisticated or professional investors.
• Cooling-off period. Investors have five business days to withdraw their application after making it — no questions asked.
• Licensed intermediary. All CSF offers must be made through a platform operated by a CSF intermediary holding an Australian Financial Services Licence with specific CSF authorisation.

How the Process Works

Running a CSF offer isn’t something you can do on your website. The process is tightly regulated, and it flows through a licensed platform.

Step 1: Choose a platform. The main CSF intermediaries in Australia include Birchal (the market leader by volume), Equitise, OnMarket, and VentureCrowd, among others. Each platform has its own fee structure — typically an upfront administration fee (around $2,000–$5,000) plus a success fee of 5–7.5% of funds raised.

Step 2: Prepare your CSF offer document. This is the disclosure document investors will rely on. It’s less onerous than a full prospectus, but it’s not trivial. Under section 738G of the Corporations Act, the offer document must include information about the company, the offer, the rights attached to the shares being offered, the risks, the company’s financial position, and how the funds will be used. ASIC provides a template through Regulatory Guide 261 to help companies prepare this.

Step 3: Platform review. The intermediary is required to review the offer document and perform checks on the company before the offer goes live. This isn’t a rubber stamp — the intermediary has gatekeeper obligations under the Act.

Step 4: The offer period. Once live, the offer runs for a set period. You’ll typically set a minimum target (below which no funds are collected) and a maximum. During this period, investors can browse the offer, ask questions through the platform’s communication channel, and make applications.

Step 5: Completion. If the minimum target is met, the offer closes, shares are issued, and the funds are released. If it falls short, all money is returned to investors.

What Changes for Proprietary Companies

Before 2018, a proprietary company wanting to use CSF had to convert to an unlisted public company — a process that brought additional compliance obligations around auditing, annual general meetings, and corporate governance. The 2018 amendment removed that barrier, but it did impose some conditions.

Proprietary companies using CSF must:

• Maintain a minimum of two directors (rather than the usual one for proprietary companies).
• Prepare annual financial reports and have them reviewed or audited, depending on how much they’ve raised through CSF.
• Lodge those reports with ASIC.

Importantly, CSF shareholders in a proprietary company do not count towards the 50 non-employee shareholder limit under section 113 of the Corporations Act. This is a critical carve-out — without it, a successful crowdfunding campaign could push a proprietary company over the shareholder cap and force conversion to a public company.

The Case For: When CSF Makes Sense

Equity crowdfunding works best when your startup has certain characteristics:

A consumer-facing brand. If your customers already love your product, they may also want to invest in it. Companies with strong brand loyalty — food and beverage, consumer tech, lifestyle brands — have historically performed well on CSF platforms. Your customers become your investors, and your investors become your most vocal advocates.

A community to mobilise. The most successful CSF campaigns aren’t passive. They require marketing effort — social media, email lists, PR. If you already have an engaged audience, you have a head start. If you don’t, building one from scratch just for a crowdfunding campaign is expensive and uncertain.

A story that resonates. Retail investors aren’t running DCF models. They invest in things they understand, believe in, or want to be part of. Impact-driven businesses, innovative products with a clear narrative, and brands with personality tend to do well.

A desire to keep optionality. CSF can be a useful bridge between bootstrapping and traditional venture capital. It lets you raise meaningful capital without giving up a board seat or accepting the governance and return expectations that come with institutional money.

The Case Against: When CSF Doesn’t Fit

You need more than $5 million. The $5 million annual cap is firm. If your capital needs are larger, CSF might work as a component of a broader raise, but it won’t get you there on its own.

Your product is complex or B2B. Enterprise SaaS, deep tech, and infrastructure businesses often struggle to generate excitement among retail investors. If your value proposition requires a 20-minute explanation, crowdfunding will be an uphill battle.

You’re not ready for the disclosure. The CSF offer document requires you to disclose your financials, your risks, and your business plan in a public document. If your company isn’t in a position to share that information — because the numbers are early-stage ugly, or because there’s sensitive IP you’d rather not publicise — CSF may not be the right timing.

Cap table complexity. A successful CSF campaign could add hundreds of shareholders to your register. While CSF shareholders don’t count towards the proprietary company shareholder cap, they still exist. Managing communications, future consent processes, and pre-emptive rights (if applicable) across a large and dispersed shareholder base adds administrative overhead. Future institutional investors may also push back on a fragmented cap table — something we’ve written about before.

Platform and campaign costs. Between platform fees, legal costs for the offer document, marketing spend, and the time your team invests in running the campaign, a CSF raise isn’t free. Budget $20,000–$50,000 or more in total costs, depending on the complexity of your offer and how much external help you need.

Practical Tips If You Decide to Proceed

1. Engage a lawyer early. The CSF offer document has prescribed content requirements and specific liability provisions if it’s defective. Get legal advice before you start drafting, not after.

2. Set realistic targets. A minimum raise that’s too high creates a binary risk of failure. A maximum that’s too low leaves money on the table. Model both scenarios carefully.

3. Plan your marketing. The platform provides the infrastructure, but it doesn’t provide the audience. You need a launch strategy, a communication plan for the offer period, and someone dedicated to managing investor questions on the platform.

4. Think about what comes next. CSF shareholders are real shareholders. You’ll need to keep them informed, manage their expectations, and factor them into future rounds. Consider how a CSF raise fits into your longer-term fundraising strategy before you commit.

5. Check your structure. Make sure your constitution doesn’t contain provisions that are inconsistent with a CSF offer — unusual share transfer restrictions, for example, could create problems. Review your shareholders’ agreement (if you have one) for consent and pre-emptive rights provisions that might apply.

Is It Right for Your Startup?

Equity crowdfunding isn’t a shortcut. It’s a regulated capital raise that requires preparation, disclosure, and sustained effort. But for the right company — one with a compelling story, an engaged community, and a product people want to back — it can be an effective way to raise up to $5 million while building a base of invested supporters.

If you’re considering a CSF offer and want to understand the legal requirements, or if you need help preparing your offer document and reviewing your corporate structure, get in touch. You can also read our guides on cap table management, co-founder agreements, and fundraising from US investors for more on getting your startup’s legal foundations right.