Birchal raises $1.2m in first 24 hours of campaign

Melbourne-headquartered crowdfunding platform Birchal has made its reputation securing capital for a wide variety of Australian start-ups and scale-ups, but now the company is harnessing the crowd to further its own ambitions.

Birchal has raised an initial $1.2 million from more than 500 investors in the first 24 hours of its own equity crowdfunding campaign, including Giant Leap venture partner Peter Cameron and long-time backer Dom Pym, the co-founder of digital bank Up and Pin Payments.

The company is hoping to secure up to $2.5 million from its latest capital raise, with the crowdsourced funding (CSF) offer opening to the public at noon.

Since its founding in 2017 Birchal has hosted 248 successful CSF offers, raising $194 million for Australian entrepreneurs of which $50.4 million was secured from 56 offers in 2023 - a slight increase on the previous year.

"Birchal is an imperative part of the Australian startup ecosystem’s financial infrastructure," says Pym.

"It’s an important vehicle for companies who value engaging with the investor community, but are not quite suited for venture capital or public listing on the ASX.

"Birchal’s contribution to the ecosystem is material, on par with some of the big venture capital firms."

The funds raised to date come from a mix of retail and wholesale investors. This is the second time Birchal has hosted its own CSF offer with the previous capital raise in April 2022 achieving its maximum target of $3 million.

"We intuitively know that there is something unique about the Birchal community and the investors we attract on the platform, but to see this type of support for the second time for ourselves really fortifies Birchal’s presence in the Australian startup ecosystem," says Birchal co-founder and CEO Matt Vitale.

To reflect the current market reality and Birchal's commitment to sustainable, long-term growth, the current offer is priced below the April 2022 raise at $0.50 per share.

"In the lead up to this raise, we consulted widely with existing investors, and new potential investors particularly in relation to the price for this raise," says Vitale.

"While we believe the opportunity in Australia remains consistent and compelling, our share price for this CSF offer reflects direct investor feedback and recent market conditions.

"The current economic conditions are markedly different to what they were when we last raised in 2022, and our valuation reflects this. It was not a decision taken lightly, but we feel it was essential to ensure the business is adequately capitalised to pursue the opportunities that are ahead of us."

Vitale cites concerns that valuations in private markets, including the CSF industry, do not always reflect market conditions.

"So with the support of our shareholders and feedback from the market, we felt this was also an opportunity for Birchal to lead from the front," he says.

"We are in a tough funding market, there is no denying this is impacting all facets of the financial system. Only last week, it was announced that there has been a 58 per cent drop in venture capital funding so far this year," he says, in reference to data released by Cut Through Ventures.

"The good news for Australian businesses is that despite these conditions crowdsourced funding is still open for business. We outperformed in the last quarter, and it reinforces the even greater need for alternative funding sources in the Australian startup ecosystem."

Despite these conditions, Vitale says Birchal's pipeline has "never been stronger".

"In the first quarter of 2023 we opened 10 EOIs (expressions of interest), in comparison we already have signed agreements with 14 companies who intend to launch in the first quarter of 2024 and a further 66 potential issuers in our engagement process," he says.

"It shouldn’t be understated, right now, equity crowd-sourced funding is offering a lifeline to many startups and scaleups. Our platform and our investor community are proving to be a resilient source of capital for our issuer clients, affirming our place, purpose and mission."

The capital raised will go towards building a market leading platform, launching products and services that complement Birchal’s current core business and diversify and grow revenue streams.