Turnbull encourages government to “think laterally” about start-up tax challenges

Federal Communications Minister Malcolm Turnbull has praised the potential for crowdfunded equity and said more needed to be done to encourage innovative companies, during a question and answer session on Facebook.

Turnbull is touring leading start-ups in San Francisco. He conducted the session from Facebook’s Menlo Park offices. The 15-minute conversation can be seen here.

“We need to do more to encourage innovative companies in Australia . . . an obvious area is rectifying the anomalous treatment of employee shares and options in Oz,” Turnbull wrote. “There is a lot of potential for crowdfunding-type models for aggregating venture capital. We need to think laterally on this critical issue.”

Crowdfunded equity is an increasingly popular discussion in the Australian tech start-up ecosystem with the success of international platforms such as Israel-based OurCrowd becoming better known.

OurCrowd founder John Medved said in October that Australia had “huge potential and room for growth in Australia” at an event on the emerging opportunity.

“The people here in Australia have courage, they’re quirky and interesting. You’ve got a lot of money and everything going for you. When I come back here in five years, I reckon you’ll be a completely different ecosystem,” Medved said.

VentureCrowd, an Artesian-backed platform to enable Australian crowdfunded equity, launched in December.

Artesian managing partner and co-founder of VentureCrowd, Jeremy Colless, said the approach would enable more individual investors to be part of start-up opportunities.

“This will help attract and retain a new generation of savvy tech investors who have been prevented in the past by the clubby nature of venture capital or the high hurdles in the space.”

The previous federal government announced a review of the regulatory issues around employee share schemes and equity crowdfunding last year.

A discussion paper on crowdfunded equity was released by the Corporations and Markets Advisory Committee in September 2013.

CAMAC deputy director Vincent Jewell told StartupSmart they were taking a “clean sheet” approach to the process and were anticipating considerable input given the interest in the area.

“It’s a very active area that’s attracting lots of interest. We know there are people out there wanting to make use of these options, and there is an eagerness to raise funds through crowdfunding. The enthusiasm and frustration with the legal impediments at the moment means I think there will be enthusiasm to have some input into the process,” Jewell says.

The next stage in the review process is the release of a report based on the submissions.

A team member at CAMAC told StartupSmart this morning they have “no time or date for the release of the report as yet”.