Bubble tea, hot sauce drive crowd-funding records

Despite pandemic pain, crowd-funding has had its biggest ever quarter as the go-to funding source for small start-ups. See full list of successful offers over the past year.

Bubble Tea Club, started by Melbourne friends Pam Yip and Jenny Le, was another crowd-funding success story. Picture : Nicki Connolly

Bubble tea, craft beer and hot sauce have all helped Australia’s crowd-funding industry hit its biggest quarter yet, with the sector defying economic uncertainty and the ongoing Covid pandemic to double in the past 12 months, according to new figures from the industry’s largest player Birchal.

Crowd-funding has become the go-to funding source for Australia’s most exciting small businesses and start-ups, according to Birchal managing director and co-founder Matt Vitale, who said the sector is the strongest it’s ever been.

“Given the current lockdowns across the country, it seems we will be feeling the effects of the Covid-19 pandemic for some time. However, the new financial year has started with strong activity,” he said.

“Ten successful CSF (crowd-sourced funding) offers have raised $7.8m on Birchal in July so far, which makes us confident that the CSF regime will continue to grow in the coming financial year and beyond.

“The industry is proving to be a resilient and reliable funding source for small businesses and start-ups, and a great way for retail investors to get exposure to a new and exciting asset class. It’s the go-to funding source for Australian early-stage businesses now.”

Birchal’s “Funded! FY21” report, released Tuesday, revealed that Birchal completed a 620 per cent year-on-year increase in successful crowd-funding offers completed in the June 2021 quarter, raising over $18.7m from over 10,000 investors across 22 campaigns.

Financial services was the most invested in industry in FY21, with 13 successful crowd-funding offers raising a total of $14.7 million, representing nearly a third of all funds raised through crowdsourced funding for the entire financial year. Food and beverage, software, and healthcare were the next popular categories.

Birchal directors Adam Vise, Matt Vitale and Alan Crabbe. Source: Supplied.

According to Mr Vitale, over 144 businesses have collectively raised over $100m since the commencement of Australia’s crowd-sourced funding industry, while over 68,000 investors have participated in CSF offers, a number continuing to grow despite the ongoing pandemic.

Some new records were set in the last year, with Thrive raising $3m in three days in February 2021, the equal largest and fastest CSF offer at the time. LITT and Single Use Ain’t Sexy have since claimed the fastest crowd-funding offer record each completing their campaigns in just two days.

New South Wales had the highest number of successful deals with 25, followed by Victoria with 21 and Queensland with eight.

Activity in the Australian CSF industry has continued to consolidate during the 2020/21 financial year towards the three major platforms Birchal, Equitise and OnMarket.

Overall there were 63 successful CSF offers were completed over the year, up 40 per cent on the previous year, raising a total of $47m, a 100 per cent increase.

Birchal finished the year having hosted 71 per cent of all successful CSF offers (45 in total), raising 70 per cent of all funds raised ($32.9m) and facilitating 81 per cent of all investments (20.1k) across the CSF industry in the 2020/21 financial year.

“What sets us about from the other platforms is our company focus, we‘re really focused on each business as a discrete project, and showing their opportunity to their audience. Investors can then relate to these businesses personally, whereas I think other areas of the market investors are just focused on a financial return,” Mr Vitale said.

“So even when the economy is not doing so well, there is personal reason behind why a lot of these people are backing these projects.”

Fast-growing Australian start-up Thrive broke crowd-funding records earlier this year, raising $1m in just under three hours and smashing its $3m target in record time, as the company eyes an international expansion.

Thrive CEO Michael Nuciforo described crowd-funding as a “complete game changer”.

“Equity crowd-funding allowed us to engage our member community on a much deeper level than just servicing them with a product,” he said.

“Our members that invested have real skin in the game, they are part of our family and the experience of growing a business is so much more rewarding for both us and them.

“If you’re running a business that is built on community – having customers as investors forces a mindset shift – you’re absolutely in this together.”

Bubble Tea Club was another success story. The company was started by Melbourne friends marketer Pam Yip and optometrist Jenny Le amid the Covid-19 pandemic last year, along with fellow co-founders Justin Huang, 16-year-old Tim Huang and Yi Ong, Justin’s co-worker who was stood down during the pandemic but was ineligible for JobKeeper.

“To think, this all started in lockdown last year after losing our jobs, and now Bubble Tea Club is responsible for creating jobs for 30 people,” Ms Yip said.

“Not only were we the first company in Australia to produce bubble tea making kits for the home or workplace, we were also one of the only companies in the world, and we still are the leading company to do so globally.”