Is ASSOB the answer?

We continue to work our way up the funding ladder, looking at the various options available to businesses to raise finance to fund growth. Having taken a closer look at crowd funding, grant funding and business angels now it’s the turn of ASSOB!

ASSOB stands for the Australian Small Scale Offerings Board.  Many people haven’t considered ASSOB as an option for raising capital but it has raised over $120m for over 200 companies and so should be a serious consideration for the right sort of company.

ASSOB is an unlisted securities platform, it is not a stock exchange like the ASX or NSX which shows live buy and sell offers although they do have a secondary sales functionality but given the lack of liquidity sales are relatively infrequent.

The process

You cannot list on ASSOB without using one of their accredited sponsors. The sponsor is responsible for holding your hand through the requirements of a listing as well as facilitating the preparation of an information memorandum which is the primary sales document used to raise capital.

Before listing on the ASSOB platform you have to seek approval from the listing committee and it’s not a foregone conclusion. They do consider quality start-ups but prefer established profitable companies. If you’re a start-up with no track record of revenue or profitability ASSOB isn’t really for you.

ASSOB operates under a class order from ASIC (02/273), this basically means that it is allowed to run a business matching service and facilitate the raising of up to $5 million from 20 ‘sophisticated’ or high net worth individuals in any 12 month period but without the onerous regulations of a full listing including disclosure statements.

In a way ASSOB is a form of crowd funding, where companies listed on the platform use their networks to find people to invest in their company. The main difference though is that you are limited to 20 investors in any 12 month period and they must be ‘sophisticated’ or ‘high net worth’ individuals, which, as you can imagine, significantly restricts your target market vs more traditional crowd funding.

When you list on ASSOB you have to become a public company and comply with the relevant Corporations Act legislation, most notably at least 3 directors and an annual audit to name a few. As a result of this ‘public’ company requirement ASSOB is a great staging ground before a listing on a recognised stock exchange such as ASX or NSX. So if you’re planning a move to a recognised stock exchange ASSOB is a good stepping stone.

Many companies list on ASSOB as a ‘compliance listing’, not to raise capital but to establish a channel for shareholders to buy and sell shares via the secondary sales platform. The secondary sales platform is not an established market, in other words it DOES NOT quote live share prices, all it does is quote asking prices and then leaves it up to a willing buyer and willing seller to negotiate.

Dispelling the ASSOB myth

ASSOB has a database of over 15,000 registered investors on its platform and many companies make the mistake of assuming that they will easily attract investment just by marketing to this database. This is NOT the case.

Many of these ‘investors’ are not active and you cannot rely on this database for your capital needs. You have to go out and market your company, much like crowd funding, but you cannot approach the public. Therefore you have to have a solid marketing and public relations campaign to act on.

This is a much more difficult process than crowd funding. With crowd funding you can approach anybody to promote your project. With ASSOB you are only allowed to approach sophisticated or high net worth individuals, i.e. you can’t just post something on your website stating you’re looking for capital, go and look at our ASSOB profile!

The other common mistake is to rely on the sponsor to bring the investors. Don’t get me wrong, some sponsors are very well connected and will give you access to more potential investors, BUT the sponsor’s primary role is to guide you through the ASSOB process and ensure you comply with the legislation.

This is the piece that many companies listing on ASSOB struggle with so make sure that if you are considering ASSOB as a means to raise capital you go into it with your eyes wide open.


Let’s conclude by summarising in terms of the key aspects of our funding ‘checklist’: 

  • Cost of funding – An ASSOB listing can cost anywhere from $8,000 upwards, $4,500 of this is ASSOB application and admission fees and the balance relates to sponsor fees although these can vary widely depending on the size and complexity of the company and what they are trying to achieve. Then there is the success fee, ASSOB take 1.5% (plus GST) of all funds raised and your sponsor will typically take anywhere between 5% and 7% of funds raised.
  • Ease of access – You will need to be approved by the listing committee prior to being included on the platform. ASSOB prefers more established companies with a track record but will look at start-ups as long as there is some kind of track record of revenue and profitability.
  • Speed – The process is typically not that quick. There are still a bunch of legal requirements that have to be complied with and this takes time. You’ll need to exercise some patience and expect at least a 6 month process.
  • Security – none, you’re looking for equity investors and so there should be no security requirements.
  • Consequences – The main consequence of an ASSOB listing is the corporate governance that you now have to comply with as a result of being a public company.
  • Size – The funding range is from $200,000 to $5 million although the average is around the $600,000 mark. 

Please feel free to contact Lattice Capital on for advice regarding capital raising options in Australia.

Next week we’ll work our way a little further up the funding ladder and take a closer look at Venture Capital & Private Equity.

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Business Angels – on a wing and a prayer!

We are slowly working our way up the funding ladder, looking at the various options available to businesses to raise finance to fund growth. Having taken a closer look at crowd funding and grant funding now it’s the turn of Angel funding!

Business angels, like their celestial counterparts usually have superior expertise, networks, market access and investment capital. Accordingly they are well-placed to invest in high-risk, early-stage, ventures by taking a portion of their portfolio to provide emerging companies with seed and start-up capital. Their goal is to achieve significantly higher returns than from other asset classes. Best of all, from the entrepreneur’s perspective – “angels” contribute their time and experience, as well as offer introductions to valuable contacts.

You may have seen their kind in action on the BBC’s “Dragon’s Den” Unfortunately “benefaction” is not their primary objective!

Angel investors are often found among family and friends, so before searching further afield, make sure you have approached supportive family members …and any ‘rich uncles’ that maybe lurking! The capital provided by angel investors can be in the form of a once-off investment or, as more often is the case, by them providing ongoing financial and managerial support.

How do you find an angel investor?

If your family isn’t that well heeled, or well-connected, there is always the internet, where there are a large number of websites/platforms that focus on identifying and then, introducing suitable investors to would-be seekers of finance.

Whilst Australia has yet to develop a significant population with the risk appetite for angel or venture-capital investment, as exists for example in the US, the Australian Association of Angel Investors (AAAI) nevertheless estimates that in 2010 Australian angels invested >$1 billion in 5,000 early-stage businesses (source: AAAI website), a significant source of business funding by any measure.

Another option is to communicate with relevant industry specialists in State Government for useful referrals e.g. the Queensland Department of Employment, Economic Development Innovation.

Other avenues to try include:

How do angel groups work?

Angel groups pool their resources, expertise and money. An example would be the Brisbane or Sydney Angel’s groupings. In certain instances e.g. Sydney and Melbourne these groups have built up collective investment funds, called “side-car” funds – which comprise a pool of capital of approximately $10 million. Collective investment allows these groups to take on larger investments and increase their level of support and involvement for entrepreneurs (by enabling a deeper due diligence, greater awareness of industry risks and valuations and also business opportunities between groups nationally and internationally).

How much capital can be raised through Angel Investment?

Typical angel investment round’s raise between $350,000 – $400,000 (source: AAAI website) – depending on the investment case, although most companies have more than one investment round.

What do angel investors expect from you?

Before preparing your pitch – you will need to consider the following key issues – all of which need to be properly researched and presented:

  • Business plan
    • Have you developed a professional and comprehensive business plan that articulates your key business strategies, and which will stand up to the scrutiny of some of the harshest ‘judges’ you will encounter?
  • Market size
    • Are the projected revenues in your product category large …and growing?
    • Is this market… or can this market be worth several hundred million dollars?
  • Target customer
    • Do you have an identifiable niche and / or market segment?
    • Is there a demonstrable and significant demand for your proposed products or services?
  • Sales strategy
    • Do you have a plan for your products and services to achieve widespread market penetration?
    • How will you do this as efficiently as possible and if so will that strategy require the creation of an internal, direct sales team, or will you rely on external channel partners?
  • Competition
    • Do you understand the market and can you demonstrate that adequately – both in a local context as well as a global context?
    • Have you identified your potential competitors?
    • Do you understand what differentiates your products and/ or services?
    • Do you understand your positioning?
    • Are there sustainable (true) barriers to entry, which will help your company to maintain its competitive advantage/s?
  • Technology
    • Have you proved the concept, and the market demand, for your product or technology?
    • Can these factors be confirmed with independent data, or by objective experts or Universities / CRC’s that operate in your field?
    • Have you built a strategy and action plan to commercialise the technology?
  • Protected intellectual property
    • Have you taken professional advice on this highly specialised area of International law?
    • Have you protected key items of intellectual property?
    • Have you performed an exhaustive search to be sure that you are not infringing on patents or trademarks held by third parties?
  • Profit potential
    • Can you demonstrate how high margins (+15%) and consistent cash flow growth will be achieved?
  • Exit strategy
    • Do you have a clear exit strategy that will enable potential investors to generate a return of at least ten times (we said this was high risk / high return investment!) within the next five-six years?
  • Financial projections
    • Have you developed achievable and realistic/well-considered human resource and financial projections – which will at their most basic, outline all the key constraints and assumptions, as well as the illustrative income statement, cash flow and balance sheet?

Angel funding is not for the faint-hearted, its only viable for businesses and business owners where they have the required degree of knowledge and sophistication to provide the in-depth research and analysis expected, then implement a plan in accordance therewith.

War stories

There are always a few war stories around which can be quite useful to bear in mind when preparing your pitch! Included below are a few ‘irritations’ raised by business angels:

  • The worldwide market is $XXm and we only need to get Y% to achieve our projected turnover!
  • Start-up, no track history, no firm orders – projecting exit in Y5 of say 20x investment.
  • Management team expecting big salaries, without investing own money and offering little equity.
  • A well prepared plan let down by wholly unrealistic growth figures. It doesn’t look impressive, it just brings the credibility of the whole plan into question.
  • Valuations that don’t sufficiently recognise investor risk and value the opportunity almost as if realising it is a formality.

Questions typically asked of Angels with regards to people issues:

  • Can I get on with them?
  • Will they listen?
  • Will they take advice and act on it (small point but they want to spend my money)?
  • Do they have experience in the sector?
  • Do they look like they can run a business or are they really looking for a job?


Let’s conclude by summarising in terms of the key aspects of our funding ‘checklist’:

  • Cost of funding – angel investment usually requires giving up a significant stake, in exchange for the investor’s skills and capital. It is thus the most expensive funding, if your business is successful, however without it you may not have a business at all!
  • Ease of access – never easy to arrange …and only capable of being obtained after proper preparation of a suitable business plan, and presentation which may need to be pitched to many groups and/or individuals. The process can be time consuming and stressful for those that do not like the ‘interrogative’ style of some potential investors. Furthermore there is no guarantee of success, even in instances of a superb product/idea.
  • Speed – very variable, and entirely dependent on counter-parties – you may need some patience!
  • Security – none, unless a hybrid debt instrument is used to provide the return. Angel investors usually take-up equity and are thus risk co-investors, not debt financiers.
  • Consequences – You will be responsible for reporting back to your co-investors on a regular basis and also being held accountable for delivery in terms of the business plan.
  • Size – typically from $25,000 to $500,000.

Please feel free to contact Lattice Capital on for advice regarding angel Investment, both locally (within Australia) and also from offshore.

Next week we’ll work our way a little further up the funding ladder and take a closer look at the Australian Small Scale Offerings Board (ASSOB), how it works and what is involved in an ASSOB listing!

Government Grant funding in Australia

Grant funding is often overlooked as a source of capital for small business in Australia. Admittedly there are few, if any, grants for starting a business, however there are grants and other assistance available for business activities such as expanding your business, research and development, innovation and exporting.

All of these activities can be very expensive and therefore any Government assistance available to mitigate these costs should be considered.

A grant can help with capital purchases, training, advertising and promotion. Many of these grants have a very niche focus though e.g. supporting indigenous Australians, growing primary production capacity, targeting export markets etc. But don’t give up hope as it’s pretty quick and easy to see if your business is able to apply for a grant.

Where to find them?

So where do you start? Well go and have a look on Google for Government Grants and you’ll find quite a few websites all offering to solve your funding issues by helping you identify and apply for grants relevant to your business sector and your needs.

The other option is to use the website, an Australia Government website which, at last count, had information on 620 grants across Australia. You can search for grants at a Federal or State/Territory level through this website.

The other option is to research your local council website to see what grants are offered for small business. Again, you are unlikely to find any that will fund start-up costs but you may find some financial assistance to support a training or marketing program you are undertaking.

How do they work?

Each grant is different, some are available once a year, others on a quarterly basis and some on an ongoing basis. You will need to look at each one to see when the next grant applications are assessed.

Some grants may also require a financial contribution from the business on a matching basis, i.e. we’ll give you $20,000 if you put in $20,000, which is all very well as long as you have a lazy $20,000 hanging around!

Commercialisation Australia (CA)

One of the most popular grant funding agencies in Australia is Commercialisation Australia, a Government initiative which is a competitive, merit-based assistance program offering funding and resources to accelerate the business building process for Australian companies, entrepreneurs, researchers and inventors. They have ~$280 million of funding available through to 2014 and ~$80 million per annum there after!

They have four broad grant categories

  1.  Skills & knowledge – up to $50,000 to access specialist advice and services. A 20% contribution is required from the participant. This grant can cover the cost of developing or reviewing a business plan; determining suitable corporate structures;  undertaking a risk analysis,; developing an investment proposal and pitch; and developing a capital plan to identify funding requirements amongst others.
  2. Experienced executives – up to $350,000 to engage a CEO or other experienced executive.  A 50% contribution is required from the participant. This grant can cover employment of an experienced Chief Executive Officer or other senior executive.
  3. Proof of concept  – $50,000 to $250,000 to prove the commercial viability of new IP. A 50% contribution is required from the participant. Proof of Concept assistance will fund the steps necessary to establish the commercial viability of a new product, process or service including costs in relation to Labour, Contracting , Plant, Prototyping and Intellectual property protection.
  4. Early stage commercialisation – $50,000 to $2 million to take a new product, service or process to market. A 50% contribution is required from the participant. Proof of Concept assistance will fund the steps necessary to establish the commercial viability of a new product, process or service including costs in relation to Labour, Contracting , Plant, Prototyping and Intellectual property protection.

So let’s conclude by looking at our funding checklist:

  • Cost of funding – grants are typically not repayable but may require a participant contribution of up to 50%.
  • Ease of obtaining – There is normally a strict set of application criteria that have to be met. Grant funding is limited can be a very competitive process.
  • Speed – This depends on the agency in control of the grant. As with any “red tape” things can drag on a bit so you need a good dose of patience!
  • Security – none, zilch, zippo
  • Consequences – You will be responsible for reporting back to the agency who provided the grant and showing them proof that the grant was spent in the manner originally anticipated.
  • Size of funding – this varies considerably from a few thousand up to $2 million.

So Grant funding is potentially a viable option for many small businesses in Australia to consider. It’s worth taking a bit of time and doing the research, you may be pleasantly surprised!

What grants have worked for you and which were a waste of time and effort? Please feel free to share and comment.

Contact Lattice Capital on for more advice on accessing Government Grants.

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