Australian Mortgage Marketplace Limited (“Australian Mortgage”) has today successfully closed its crowdfunding Industry Equity Offer through enable Funding.
The Offer of ordinary shares was made primarily to the mortgage finance community of Australia, inviting ‘our crowd’ to participate as early-stage shareholders in Australian Mortgage.
The crowdfunding campaign received $671,000 in share applications from 89 investors. Investment amounts ranged from $2,500 to $30,000 with an average investment amount of $7,539.
“The success of our Industry Equity Offer demonstrates vital support and advocacy from the mortgage finance community” said Kym Dalton, Chief Operating Officer.
|Campaign type||Crowd-Sourced Funding (CSF) Offer made under Part 6D.3A of the Corporations Act 2001|
|Campaign closed||21st December 2018|
|Campaign duration||57 days|
|No. of investors||89|
A Neo Way for a Neo Lender
Introduced in late-2017, the Crowd-Sourced Funding (CSF) regime enables early-stage and growth-stage ventures to access investment funds from the public. For Australian Mortgage, crowdfunding represented a ‘neo way’ to launch our product offering to the mortgage community.
Because the ‘Australian Mortgage Revolution’ launch campaign was essentially targeted at our future clients – the mortgage finance community – this presented both challenges and opportunities for the team.
“We introduced a new product to market without a recognised brand and at the same time, we were asking the market to demonstrate their support for that product by making an investment” said James Green, Director of Distribution.
The focus of the campaign was to introduce the Australian Mortgage philosophy and a modern approach to responsible mortgage lending. At the heart of this is Intelligent Credit, a new way for credit advisers to create tailored home loan solutions with personalised interest rates for their clients, and rapidly approve those loans on the spot.
This meant that an in-depth discussion and demonstration was key to delivering our message. To that end, the campaign was supported by launch events held in Sydney on November 21stand Melbourne on November 29th as well as a Webinar that went live on December 3rd.
|Event||No. of Registered Attendees|
In the lead-up to these events, Australian Mortgage launched an online marketing effort to raise awareness of the company and the equity crowdfunding model. Event registrations exceeded expectations and gathered momentum with headlines in industry press such as The Adviser and Australian Broker among others.
The Offer was not underwritten, and no investment was pre-arranged. The challenge for the team was to create interest in the company and product first, and then drive interest in investment on the back of that market engagement.
As the Offer opened 27 days ahead of the first event, this meant that prospective investors held off in making their decision until after they had attended an event or webinar and to see whether it seemed likely the Offer would reach its target investment amount as the closing date approached.
The enthusiasm generated by the events saw 85% of share applications received in the 3 weeks following. Over 55% of share applications were received in the final 7 days of the Offer and 22% on the last day.
What We Learned
|Crowdfunding is big commitment – but worth it||The crowdfunding campaign was a significant undertaking for our company and required the best efforts and dedication of every team member. Although challenging, the campaign was an opportunity to polish our corporate identity, refine our key messages and make a great first impression in market. We will continue to see the benefits of this campaign in the years to come.|
|Know your crowd||Without a retail brand, marketing Australian Mortgage to the general public was going to be a challenging proposition. We needed to find our own crowd. By targeting the mortgage industry, we reached a crowd that would understand the innovation and benefits that Australian Mortgage brings.
As a result, we achieved high industry participation in the crowdfund with an average investment size that reflects a large shareholder base, not dominated by a few large investors. This investment base, together with the size of the mortgage and finance community, indicates that further Industry Equity Offers may be a viable ongoing proposition for Australian Mortgage and like-minded companies.
|Timing is everything||As 2018 saw the revelations of the Hayne Royal Commission, mistrust in the banking sector and a return to recognition of responsible lending standards was on the cards. We seized upon a perfect time to introduce Australian Mortgage to the finance community in an initial Industry Equity Offer that would demonstrate advocacy and support for our products. However, our timing within the offer period was less than optimal for our investors. The timing of share applications tells us that investors want more formal notice of the launch of the offer period to digest information. A later opening date, or flexible offer period that would allow extension of the offer to 90 days, would have been given us the opportunity to keep momentum going.|
|Tax incentives are a win for innovative companies and investors||Our status as an Early Stage Innovation Company (ESIC), which provides valuable the tax incentives for early stage investors, proved to be a significant support to our crowdfunding campaign.|