Equity Crowdfunding and your Super

Equity Crowdfunding and your Super

Equitise’s home-turf, Australia, offers an interesting alternative to a standard superannuation scheme: the possibility of self-managing your retirement fund.

Rather than placing your savings in a professionally managed fund, a self-managed superannuation fund (SMSF) provides greater control and discretion over your retirement savings. SMSFs have risen in popularity over the past decade and are now the single largest superannuation sector by dollar value, surpassing the retail fund sector.

How does equity crowdfunding play a role?

Having access to a broader range of investments is often a reason for starting an SMSF. Through an SMSF you can invest in the usual investments such as shares, term deposits, managed funds and property. Beyond these investments, an SMSF can also hold alternative assets such as antiques and artwork, and, crucially, shares purchased through equity crowdfunding.

“About 40 per cent of the money going through our transactions is Australian SMSF and high net worth-type investors”

– Equitise’s Co-Founder and Managing Director Chris Gilbert

Equitise has experienced a high amount of investment from Australian SMSFs. This, we expect, is due to the slow response of Australian regulators to the global surge in popularity of equity crowdfunding. In Equitise’s second market, New Zealand, regulation has allowed “mum and dad” investors to invest through equity crowdfunding platforms, however Australia restricts this to ”sophisticated”, high-net-worth individuals.

Consequently, SMSFs present an exciting opportunity for Australian investors who do not satisfy the criteria of a “sophisticated” investor. Until Australian regulations catch up with their counterparts around the globe, SMSFs are providing Australian investors with an avenue into equity crowdfunding.

How does it work?

If you set up an SMSF, you're in charge – you make the investment decisions for the fund and you are ultimately responsible for the running and administration of the fund. It's a major financial decision and you need to have the time and skills to do it.

The difference between an SMSF and other types of retirement funds is that the members of an SMSF are usually also the trustees. Accordingly, SMSFs are run for the members’ own benefit; members are responsible for complying with the super and tax laws.

Consequently, SMSFs are best-suited to people with a large amounts of retirement savings, and extensive skills in financial and legal matters.

How is Equitise accommodating SMSFs?

Already, investors with SMSFs contribute a significant proportion of the investment through Equitise’s platform. We will continue to provide a broad range of investment opportunities – from seed-stage investments to established, mature companies – to bring portfolio diversity and drive private-company investment in Australia and New Zealand.

Equitise is extending this, establishing a syndicate investment platform that would allow groups of like-minded investors to create their own investor club for new investment opportunities. This will allow groups of investors, including those self-managing their super funds, to make angel investments online, through an easy and transparent process.

Furthermore, Equitise is planning to hold an Australia-wide roadshow to inform investment advisers and accountants of the symbiotic relationship between SMSFs and equity crowdfunding.

Keep an eye out for further discussion on the Australian regulatory crowdfunding environment over the coming weeks.

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