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Australian entrepreneurs Dan Joyce and Jared Mooring have turned to UK-based equity crowdfunding platform
CrowdCube to raise seed funds for their new venture,
My Mate Your Date.
The aim of the business is to turn online dating into a trusted, fun and safe experience by connecting users to singles who are already friends with their friends. In the UK alone, the online dating market had an annual revenue of around £159 million last year, generated from a pool of roughly 16 million internet-using singles. In Australia, the market is estimated, according to IBIS World figures to be worth $113 million. Interestingly, the same report says there is no one company that has complete (financial) dominance in the space locally either.
Dating is one of the most competitive industries that exists globally. It was in late 2013 that Joyce began to create what was at the time called MayDate, the first iteration of the current startup. Like My Mate Your Date, it was still all about finding the person that you love, but also giving back to a social cause.
Since that time Joyce has relocated to London and pivoted slightly - the social cause angle is does not exist anymore, and that means there has been a greater focus on creating a successful algorithm for matches and adding a couple of key features in the new iteration to get people hooked.
One of these features is the ability to join the platform as either someone looking to find love or as a 'matchmaker' - an element I personally think provides a layer of engagement beyond what other technology players in the space are doing.
Rather than raise capital traditionally for the venture, Joyce who co-founded and sold Red Room DVD to Franchiser Entertainment Group (Blockbuster and Video Ezy), and Mooring who used to be the Head of Technology for VIvant Ventures, decided to raise a seed round of £130,000 via equity crowdfunding through the platform CrowdCube. At the time of publishing, My Mate Your Date has raised 56 percent of what they are looking to raise, or a little over £73,000.
"CrowdCube gives us the opportunity to get our business in front of both experienced and active angel investors and industry players. It also accesses a huge segment of society who previously didn't have the opportunity or means to invest in startups and might invest £50-£1,000 and be brand ambassadors. People now talk at the pub on Friday about businesses they've backed - not just which horse is running this weekend," says Joyce.
This is the brilliant part - the low investment barrier that the CrowdCube platform has. Users can literally invest £10 to £500 if they want to towards a venture, taking a small slice of the equity that is on offer. This is in-an-of itself beginning to create a unique layer within the startup ecosystem in the UK.
Humans inherently want to be part of something, especially in the startup space, and the platform, albeit representing a risk to some people who does not know what they are doing, also has the potential to pay out great dividends - as well as allow people that usually wouldn't be able to, an opportunity to add 'investor' to their resume.
Joyce said that momentum is absolutely key: "You need to bring your own networks to the campaign to kickstart it, and then you need continual stream of investments, because each new investment pushes your listing back to the top of the CrowdCube homepage, generating more interest. We've almost hit 50 percent funded in the first two weeks, which is fantastic - and provides genuine social proof of our concept. We're now looking to close out in the next few weeks, and get back to business".
There has been a lot of discussion around Australia and Equity Crowdfunding in recent months. Taxi technology company, Ingogo made headlines nationally after it announced that it had raised $1.2 million in a pre-IPO round via Australian equity crowdfunding platform
Venture Crowd, backed by Artesian Venture Partners.
Although Venture Crowd has a higher minimum investment amount (AUD$1,000) for its investors, given the buy in to an investment fund can be as much as AUD$250,000 - it has still managed to democratise the local industry in quite a significant way. Obviously the high profile raise conducted by Ingogo has been a major win for the platform, so it will be interesting to see what follows.
I do believe that opening up the platform to novice investors below $1,000 and simplifying the signup process to a one-click situation as CrowdCube has done could be of benefit to the business - or at the very least, companies raising on the platform should be able to opt-in or out whether they will accept investment from that crowd.
Last month, Chris Gilbert, co-founder of investment platform Equitise,
wrote a piece for Startup Daily, in which he pointed out the need for Government to hurry up and legislate around Equity Crowdfunding, so that Australia is not left behind the rest of the world.
Crowd Sourced Equity Funding (CSEF) provides opportunity, it stimulates growth and most importantly it democratises finances. Added to that, it gives investors the ability to invest in early stage and previously inaccessible private ventures which in turn gives these people the ability to access diversification within their investment portfolios.
CSEF is going to be “legalised” very soon in Australia and has already opened up in New Zealand as a means for entrepreneurs and small business owners to access capital that they otherwise couldn’t.
Gilbert has decided whilst the Government makes a decision around the issue that himself and his co-founder will be launching the Equitise platform in New Zealand first.
While the Australian Government decides on a path forward that is credible to both the longevity of a new asset class and the longevity of intermediaries, Equitise has decided to push forward and launch our business in New Zealand. Equitise currently has a license pending in New Zealand with the FMA and will be one of the first intermediaries. We aim to deliver a trans-Tasman CSEF platform within the next 18 months and open up deal flow between New Zealand and Australia.
Equitise met with The Australian Government and Treasury recently in Canberra to discuss the lack of urgency and timings around release of legislation and when this will occur. Treasury and key representatives from the Federal Government indicated that they are advocates for the rollout of CSEF in Australia. (You can read more about the outcomes of this trip in the Equitise blog.)
From this trip, it as obvious to me that Equity Crowdfunding is certainly on the agenda, however the implementation is being delayed as the Federal Government wishes to ensure that this new legislation is integrated properly and efficiently into the investment marketplace.
As previously mentioned by directors at Equitise, Key stakeholders in the CSEF space need to band together to grow the number of voices in this space. The government is well aware and very supportive of CSEF; however what we are lacking is absolute urgency to get it pushed along faster (but in a positive way).
The good news is that it is on the agenda. The bad news is that the longer it takes, the more at risk we are as a nation of Australian startups using alternative solutions like CrowdCube to seek funding instead.
Equity crowdfunding is certainly in my opinion an important ingredient to creating a more engaged and less fragmented local startup ecosystem - it allows everyone the opportunity to be part of the next big thing, even if it is just in a very small way.
