What is an intermediary's due diligence process for an equity crowdfunding raise?
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There are many factors an investor must consider when undergoing due diligence for a potential investment. This includes legal, financial, business, and management information that must be obtained to make an informed investment decision.
Although this process can feel overwhelming, OnMarket assists investors in conducting due diligence through its Gatekeeper Commitment for all equity crowdfunding investment opportunities listed on the website.
As an Australian Financial Services Licensee, OnMarket can operate a platform for equity crowdfunding offers and investments. As a Crowd-Sourced Funding intermediary, our responsibilities under ASIC regulations include:
conducting good fame and character checks on all directors
checking a company’s eligibility for equity crowdfunding
ensuring the offer document is factual and contains the business information required
making sure all investors are made aware of the risky nature of investments under the crowdfunding investments
Our selection process
To assist your due diligence when making investment decisions, we do two things when selecting companies to make offers on our platform under the Crowd-Sourced Funding (CSF) Regime:
Leverage our commercial judgement, and 110 years of combined experience, to bring retail and high-net-worth investors opportunities that are attractive
Execute the legally required checks outlined above
As part of our approval process, we focus our analysis on 5 pillars: Business, People, Financials, Legal and Risks. Our goal is to ensure the campaign documents contain material information on these 5 pillars so you can make an educated investment decision.
Companies are required, at a minimum, to include a business plan that includes:
OnMarket will undertake several checks on all relevant individuals including:
The assessment of the financial position and prospectus undertaken by OnMarket will be dependent on the stage of the company. This might involve:
When considering the legal and capital structure of companies raising capital on our platform, we generally:
Companies raising under the equity crowdfunding regime are required to disclose risks that may specifically impact the business in their offer document. These may include:
Other things worth noting
It is important to note that OnMarket does not endorse any of the companies raising funds on our platform, nor do we provide investment advice. Before making any investment decision, we always recommend you undertake your own research.
This should include reading the offer document carefully and may also involve reviewing all the available information provided in the campaign, asking questions directly of the company management via the OnMarket communication facility, and understanding the risks associated with investing in early-stage businesses.
Click here if you would like to read more about OnMarket’s gatekeeper commitment.