Gen Z turns to crowdfunding after VentureCrowd and Birchal post record years

Gen Z investors chasing stakes in bubble team or craft beer help alternative investment platforms hit the $1bn with record results.

With the stockmarket looking shaky, alternative and crowd-funded investments are booming, with VentureCrowd raising $10m as it stakes its claim to become Asia’s largest alternative asset platform over the next 12 months.

VentureCrowd, which counts high-profile outfits Nexba, Expert 360, Unyoked and Judo Capital as portfolio companies, raised $6.6m for its Series A funding round from existing investors and $3.9m from new investors through the VentureCrowd platform.

Chief executive Steve Maarbani said he’s building a war chest to expand into southeast Asia, with VentureCrowd capitalising on demand from millennial and Gen Z investors who want to back purpose-driven projects.

“What we’re seeing is huge growth in the popularity of alternative investments and growth in the importance of sustainable and purpose-driven investments, and when you add those two together, along with the largest intergenerational transfer of wealth in modern history, you get some huge tailwinds that are driving our business,” he said.

“Over the past 18 months our investor base has doubled and it’s clicking over every single day.”

Pam Yip and Jenny Le’s Bubble Tea Club broke the Australian record for the highest number of expressions of interest. Picture: Nicki Connolly

Millennial and Gen Z investors now make up 57 per cent of the global population and they significantly outnumber baby boomers.

To support its rapid growth VentureCrowd has appointed a new head of ventures – Chris Wilson – a former Deloitte Digital senior partner and one of the founders of ANZ’s venture fund, now known as 1835i.

“I’ve been around accelerators, incubators and venture funds for a long time and there was always in the back of my mind a real sense that certain parts of the investor community were missing out,” Mr Wilson said.

“There was this unwritten rule that unless you were very well connected or extremely wealthy, there were certain things you just weren’t going to see. And you ask why did I miss out on Afterpay, or Uber?

“And some companies need money and they don‘t need the other stuff, they don’t need VCs, they don’t need new directors. They just want to get the money with no daily calls to have to deal with. So this is a really interesting opportunity today but in 12 and 24 months time it’s going to be even more interesting.”

Meanwhile bubble tea, craft beer and indestructible cleaning products are turning Australia’s crowd-sourced funding industry into a $1bn business.

Figures from Birchal found that crowd sourced funding (CSF) companies have for the first time in their four year history reached a $1bn market cap, after a wave of new companies successfully brought in new investors.

Black Hops Brewing is Birchal’s first success story of 2022, raising $2.2m in crowdsourcing. Over the past year, several records were broken among CSF companies, with the likes of ZeroCo, a company which makes multi-use home cleaning product dispensers, raising $5m in less than seven hours.

The Black Hops Brewery team. Picture: Jerad Williams

Melbourne’s Bubble Tea Club broke the Australian record for the highest number of expressions of interest in their now $2m company. Meanwhile Biome, a probiotic company, launched on the ASX with an oversubscribed $8m after a successful CSF offer.

In four years more than $146m has been raised by over 200 Australian SMEs from an investor base of 93,000 passionate fans.

A total of 89 successful CSF offers were completed in 2021, a figure up 82 per cent on the previous year, with $79 million raised.

These findings and a broader industry snapshot are part of a 2021 CSF Yearbook put together by Birchal, which said it facilitated 66 per cent of all successful CSF offers last year.

Other major CSF platforms include Equitise and OnMarket.

Birchal co-founder Matt Vitale said it saw more professional investors join the CSF industry last year, leaving high hopes for the year ahead.

“Last week we closed an offer for Black Hops Brewing which raised 2.2 million in 24 hours, the largest offer for a craft beer business so far,” Mr Vitale said.

“That’s a tremendous result.

“We have two other offers in the EOI stage and a deep pipeline of business much interested in investing.”

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

Like most industries, CSF was also hit in the early months of the pandemic but soon bounced back, Mr Vitale said.

“After 2020 it was really good to resume the strong growth trajectory we’re experiencing as a new industry in Australia, there’s some really amazing results,” he said.

“The industry is now doubling year on year. We’re looking ahead to see more businesses using crowd-funding and hopefully more exits for investors to realise a return.”

Mr Vitale said all signs pointed to another year of growth for the CSF industry.

“I think it’s more often that investors are investing in these opportunities, because over and above the return, the businesses are investing in a mission or an objective,” he said.

Investors enjoyed knowing their money was being put toward a goal, and return companies only furthered investor confidence, he said.