How Changes to the New Equity Crowdfunding Laws Affect Your Startup (2025 Updated)

Contents

In 2018, legislation was introduced in Australia to provide a framework for equity crowdfunding for private companies. While initial legislation in 2017 only allowed unlisted public companies to raise capital via equity crowdfunding, this deterred many businesses from considering this option. Since then, the regulatory environment has evolved—with further amendments and refinements implemented over the past few years—making the framework even more accessible and secure in 2025.

Although Australia has been relatively late to catch on to the international phenomenon of equity crowdfunding for private companies, the change has proven to be better late than never for startups seeking alternative investment options to fuel their business growth. For more insights on raising capital for your startup, check out our finance guide.

What is equity crowdfunding?

Equity crowdfunding (referred to as crowd-sourced funding or CSF in the legislation) can be an ideal investment method for startups aiming to secure capital and build business momentum. It alleviates the pressure of locating and persuading angel investors or venture capitalists by offering entrepreneurs the opportunity to raise substantial funds from a large ‘crowd’ of retail investors. In exchange for their financial contribution, investors receive equity in the company and become shareholders.

What were the CSF laws before, and what has changed?

The previous CSF regime limited the regulatory requirements for companies that wished to raise capital through public fundraising. Initially, private companies were required to convert to an unlisted public company before they could participate in equity crowdfunding. With the 2018 amendments—and further refinements introduced in recent years—this is no longer necessary. The CSF regime now extends to eligible private companies that wish to access equity crowdfunding, meaning your startup can remain structured as a private company while enjoying this funding method. This shift significantly reduces the cost and compliance burden, allowing you to concentrate on business growth. For guidance on selecting the right structure for your business, you might also find our article on operating as a sole trader useful.

To be eligible for CSF for your private company, ensure that your:

Your principal place of business is in Australia
Your company is not a listed company
Your company has at least 2 directors
Your gross assets and annual revenue are less than $25 million
Your company’s primary purpose is not solely investing in securities

*Note that these requirements, along with certain reporting provisions, are distinct from the normal rules governing private companies.

How do I crowdfund my startup’s capital?

In Australia, crowdfunding takes place on online platforms that serve as intermediaries to connect you with potential investors. ASIC-licensed crowdfunding portals such as Birchal, Equitise, Big Start and OnMarket remain popular choices in 2025. These platforms have enhanced their protocols to offer improved investor protection and a smoother user experience. You may also wish to explore additional ASIC-compliant platforms as part of your funding strategy.

To comply with the CSF regime, your private company must publish an offer document to potential investors/shareholders detailing the investment opportunity. This document is required to include:

Detailed information about the investment opportunity
A prescribed risk warning
A cooling-off period of 5 days for investors

These disclosure requirements are generally less onerous than those for public capital raising. If you would like to review a comprehensive guide or see a template of an offer document, click here to access ASIC’s latest guide. For additional support on drafting these documents, our contract drafting service is available.

What does the new CSF regime mean for your startup?

Key benefits of the updated CSF amendments for private companies include:

No need to change structure: You no longer have to convert your private company into an unlisted public company, saving you both time and money.
Utilisation of crowdfunding portals: Your company can now advertise its business plans on ASIC-licensed crowdfunding platforms, enabling you to raise up to $5 million per year—figures which may increase in future amendments.
No cap on non-employee shareholders: The previous limit of 50 non-employee shareholders has been removed for investments made via these portals, allowing your company to attract funds from hundreds or even thousands of investors.

Be mindful of the following considerations:

Additional reporting requirements: If your company gains crowdfunded shareholders, you must prepare annual financial and directors’ reports in accordance with current accounting standards. These reports need to be distributed to shareholders and lodged with ASIC, typically within 30 days of your financial year-end.
Financial audits: Should your company raise $3 million or more from equity crowdfunding offers, audited financial statements become mandatory.
Related party and takeover rules: Your company must adhere to strict guidelines regarding related party transactions and potential takeovers, including detailed disclosures about the share offerings.
Cap on retail investor’s capacity: A retail investor’s capacity to invest in a single company’s crowdfunding campaign remains capped at $40,000 per annum.
Misleading and deceptive conduct: It is vital to ensure that all representations made to potential investors comply with legislation, including those governing Consumer Guarantees and anti-misleading practices.

In 2025, these legislative changes continue to provide a robust framework that balances the opportunities for startups with essential investor safeguards. The dynamic nature of the equity crowdfunding landscape means that companies must remain vigilant and ensure ongoing compliance with the latest regulatory updates. For further insights on navigating regulatory requirements, you might find our overview on which regulations affect your corporation particularly useful.

What to take away…

Equity crowdfunding represents an excellent alternative method of raising capital for your startup in Australia. The amendments to the CSF regime have made it significantly easier for private companies to access this funding, eliminating the need for costly structural changes while offering a route to secure investment from a diverse range of retail investors. It is crucial to ensure that your company meets the eligibility criteria and adheres to all reporting and disclosure requirements to avoid any legal pitfalls. Additionally, remaining informed about regulatory updates—such as any future changes to investment caps or reporting standards—will help you maintain ongoing compliance as your business grows.

As the equity crowdfunding landscape continues to mature in 2025, many startups are discovering the benefits of harnessing this innovative funding method to accelerate their growth. By leveraging ASIC-licensed portals and working with experienced legal advisers, you can structure your CSF campaign with confidence and clarity. Staying ahead also means proactively addressing compliance concerns, such as consumer law requirements and transparent investor communications. For more detailed guidance on your legal obligations, do explore our resources on compliance with consumer guarantees and our comprehensive business registration guide.

There is a lot to navigate before embarking on your equity crowdfunding journey, but that’s where we come in. Whether you need assistance understanding the latest legislation, ensuring robust compliance with disclosure requirements, or drafting your offer document, our team at Sprintlaw is here to help. For tailored advice and support, do not hesitate to contact us today.

Alice Kang

Alice is a legal intern at Sprintlaw. She is currently completing her Bachelor of Laws from Macquarie University and looking to do further study in the area of finance and law.