Technology and social media might also counter regulatory fears that investors might be duped, as the crowd self-regulates using the sites themselves, dissecting the online history of potential project promoters. Forums on the crowdfunding websites provide a safety mechanism that can weed out untoward behaviour by those seeking funding as the online community asks questions and provides feedback. Sources such as Facebook or LinkedIn can also provide insight into trustworthiness.
"They say the wisdom of the crowd will become more and more important," Niederer says. "I don't know what form it will take but in 10 years the wisdom of the crowd will enable people to make judgments about entrepreneurs, just like eBay, which gives sellers a rating."
Pozible's Crabbe and iPledg's Tompkins both recognise the younger generation in Australia seems to be more risk-seeking and willing to contribute small amounts of funding to Australian start-ups that excite or interest them. They believe the time has arrived for a policy debate on whether the carve-out in section 708 of the Corporations Act is sufficient, or whether Australia should examine broader changes along the lines of other countries.
"The current regulations in Australia make it expensive, time-consuming and very restrictive to publicly promote an investment offering," Crabbe says. "Technologically, a great deal has changed since these regulations were put in place and I hope the government is already working to make it easier for start-ups and new business to raise the funding they need to get off the ground.
"Countries like New Zealand, the US and Britain are leading the way with changes to their security and investment laws and this will give new [their] start-ups and small businesses an edge over their Aussie counterparts."
Tompkins says the process leading to the US JOBS Act took three years and Australia should be examining the international trends and finding the common ground on its direction.
Given the substantial mark Kickstarter has made in the pledge and reward space, Tompkins believes the impact when the JOBS Act comes into force could be significant. "I would be too scared even to try to punt a number on what could be done from an equity perspective - it could be huge," he says.
"The Australian Securities Exchange and the banks aren't even aware of the potential of crowdfunding as yet, but they should be having many a restless night in the coming years as equity crowdfunding grows."
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