The 2015-16 budget announcement this week brought welcome news for for entrepreneurs and small business owners. The budget includes  $7.8 million in funding over four years  to enable ASIC to implement and monitor a regulatory framework which will facilitate the use of crowdsourced equity funding (CSEF).

Small Business Minister Bruce Billson has recognised the success of crowdfunding in other jurisdictions as a means of allowing technology start-ups and other entrepreneurs to raise funds from a large pool of investors. Mr Billson sees crowdfunding as ‘a new opportunity we should embrace’.

Currently only wholesale investors, with more than $2.5 million in investable assets or annual earnings of $250,000, are able to able invest via crowdsourced equity funding. However, that is set to change.

The budget announcement signifies a positive response from the government to the report of the Corporations and Market Advisory Committee released in April 2014, which strongly supported the implementation of CSEF. That report recommended Australia introduce legislation allowing retail investors to invest up to $10,000 a year in start-ups via equity crowdfunding, with a maximum of $2,500 in each company. It suggested companies be allowed to raise up to $2 million per year on such platforms.

While the particulars of the legislation are not yet clear, Mr Billson has recognised that the framework will need to strike a balance between investor confidence and attractiveness to entrepreneurs considering using crowdfunding to raise capital.  An important element in achieving that balance is simplified reporting and disclosure requirements.

Given that $2.6 million is budgeted for the 2015-16 financial year, it is expected that the framework will be in place by the end of that period.