Birchal CEO issues equity crowdfunding defence after sharp VC criticism
Many VCs believe crowdfunding platforms don't protect retail investors and have called for more regulation. But those in the sector insist it provides a vital source of funding.
While speculation about changes to the rules around sophisticated investors ignited anger from the startup community earlier this year, the controversy around startups raising money through retail investors via equity based crowd-funding platforms is only just heating up.
Angel investors and VCs were quick to push back on suggests the government could tighten regulations around sophisticated investors — the requisite qualification to invest in risky assets such as startups. But at the same time, similar voices are calling for more regulation around crowd-sourced funding (CSF) in a bid to protect to retail investors.
But key players in the crowd-funding sector have hit back, arguing they operate in the only part of the startup funding landscape with any transparency.
“The criticism is astounding because I think this area, this part of the financial system, has been incredibly opaque,” says Matt Vitale, CEO at Birchal, Australia’s largest crowdfunding website. “And this is probably one of the only areas where there is regulation and transparency and accountability.”
