Dexter Cousins 0:03
Welcome to the FinTech Australia Podcast, brought to you in partnership with Tier One People, Australia's leading FinTech executive search consultants. I'm your host, Dexter Cousins.
This is Episode 22 and I'm joined by Jonny Wilkinson, co-founder of Equitise. Equitise is a crowdfunding platform that simplifies the investment marketplace. It removes traditional barriers to investing in sourcing capital by making the process quick, easy and safe. And it enables your average Aussie to invest in early stage startups like Xinja. Johnny shares his personal journey of launching the business and gives his views on the investment market.
Before the show, I want to say thanks to our partners FinTech Australia. They're a member driven organisation, building an ecosystem of Australian FinTechs to advance the global economy. They share the same mission as Tier One People, in that we look to build a strong community, foster connections and support innovation. If you'd like to find out about membership, go to fintechaustralia.org.au/join-now/
Johnny, Welcome to the show.
Jonny Wilkinson 1:21
Thanks Dexter. Thanks for having me
Dexter Cousins 1:23
Could you tell our listeners a little bit about what you do and who you are?
Jonny Wilkinson 1:27
Sure. Equitise is an investment platform for unlisted companies. We primarily use equity crowdfunding. Which is a concept of every day investors being able to put a relatively small amount of money into supporting, venture capital and other startup businesses. We've been going since 2014. My co founder and I, Chris Gilbert, were sitting in a pub at mates birthday. We're both chatting about wanting to get out of our corporate gigs, we knew what was happening in the space, regionally and globally. There was potential changes that was opening up equity crowdfunding and figured we'd go for it. We both woke up with sore heads the next day and weren't sure what was going to happen. But literally, there was something that came up on my newsfeed, I used to work in stock broking at Citibank, and we talked about basically, that what is now the precursor to the H 2 accelerate.
Dexter Cousins 2:30
I guess you've been waking up with sore heads ever since. Have you?
Jonny Wilkinson 2:34
Yes, the store has changed its from problems and stress rather than the alcohol
Dexter Cousins 2:42
You've had some really great successes. I go back two years ago, I think a lot of listeners would be aware of Xinja. You actually helped Xinja with, at the time was a record, equity fund raise. What was that experience like?
Jonny Wilkinson 3:02
Xinja was the very first retail, equity crowdfunding deal done after the laws changed., the day we actually got our licence. On the 11th January 2018 we launched with Xinja. It went gangbusters. It went beyond our wildest expectations, planning and preparation that our team and Xinja had put in to get it ready. It really paid off. I didn't leave my desk other than go to the bathroom a couple times for the ensuing 12 hours after we launched. It was a huge success. We ended up raising about $2.5 - $3 million for them as the first equity crowdfunding deal, which we were pretty impressed by.
Dexter Cousins 3:46
I guess you've continued that relationship, there was a second and a third fundraise. Could you tell us a little bit more some of the other businesses that you work with?
Jonny Wilkinson 3:56
Definitely. As you pointed out it's an ongoing relationship. That's a big part of our DNA and how we operate. We want to be the trusted partner and advisor that works with these businesses. And makes it easy for them to continue to grow. So we definitely want to be there and help them raise money a second and third time. Some other companies we raised money for, that the viewers might know about, Car Next Door. We've helped them raise money a couple times. There have been wholesale raises that we've helped with. Things like GoCatch, you may have heard of, we've helped them raise money. We did a retail raise last year that went out to their drivers. Endeavour Brewing, the boutique beer label that has the pub down in The Rocks. We've helped them raise money. Westman's Gin, a Perth gin distillery, we've helped them raise money. We've now helped, I think we've done 74 raises for 65 companies over the past few years and raised about $45 million.
Dexter Cousins 5:08
You touched on this before. You're not just helping startups raise money, but you're helping your average Aussie tap into an investment opportunity that they've never had access to up until a couple of years back. What have you found from the customer side? As in the investor side? What's been the feedback?
Jonny Wilkinson 5:32
It's been amazing. We set out with this mission to make early stage capital markets more efficient. In doing that, it's a two sided marketplace, we need companies and we need investors. Part of equity crowdfunding, and what we do is trying to make it more open and transparent for everyone to be involved. Traditionally, venture capital is an asset class that everyday investors can't readily access because you either need to be a wholesale sophisticated investor or the minimum cheque size is something in the order of $250,000 to buy into a VC fund. Most of our deals there is a minimum $250. We think it's an amazing way of allowing everyday investors the opportunity to build up a portfolio of some of these companies and that they can back some amazing, exciting businesses that have the potential to grow tremendously and potentially get great returns. It's something that we're very passionate about. Oviously, allowing everyone to be able to support and invest in these types of businesses is not only beneficial for the companies and the investors, but overall for the economy. It does tremendous things because these are the companies that are innovating, they're driving growth and employment. If we're gonna have a positive outcome, and we're gonna have innovation and things that mean the Aussie economy. Then having something like equity crowdfunding help underpin early stage capital markets is a great way of doing that.
Dexter Cousins 7:07
Talking about the economy, I think everybody's been surprised by the performance of the stock market. It seems to be doing things that are contradictory to what might suggests we're in a economic slowdown. What do you put that down to Johnny? Have you got any kind ideas or theories as to why we're seeing this huge rise in stock markets?
Jonny Wilkinson 7:33
I think there's a number of factors. Obviously, stock markets are trying to predict the future. People aren't sure of what's going to happen with Corona. Unlike previous downturns or going back to the GFC, which was a top down structural issue that unwound and devalued a whole lot of assets. This is a supply/ demand, bottom up driven outcome and the opportunity for the economy and the world to turn things back on and get back to normal is much greater. There's people trying to assess that and factor that pricing you. More to the point, particularly with a lot of the quantitative easing and other government plans, things that have been happening in western economies and other places around the world. There's literally never been more money in the world today than ever before. Right? People are probably reassessing, people are probably getting more comfortable with lower yields and returns on assets. People that can't put money in a bank and generate any real returns or wanting to invest it. Then, specifically in Australia, we're very lucky to have superannuation, which is now extremely mature. I can't remember what the current figure, is there's $2.6 trillion in superannuation. And that is a tremendous amount of money to underpin the economy with. More to the point, nine and a half percent of the gross national income is coming into superannuation each month. There's money that needs to be invested. If there aren't any new issuances on the ASX, most of the focus and allocation of a lot of these assets is towards Australian stocks. The asset prices will just get pushed up. Which means the ASX keeps on growing even if there isn't commensurate, actual growth in the underlying companies on the ASX.
Dexter Cousins 9:59
With technology certainly advanced since the GFC. I remember sitting at my desk with a Comm Sec account, putting on trades and it taking four days to settle. We're in a bit of a different world now where I could be anywhere with a smartphone and can invest. Having invested through the Equitise platform, a very, very simple process. Do you think the actual ease now with which the average investor has access to all of these opportunities, makes it a bit of a different paradigm that we're dealing with now.
Jonny Wilkinson 10:40
Without a doubt, obviously it's much quicker and easier for people to take these opportunities at the moment. If you can get up an account and get AML/KYC'd and link it to your account within a few minutes get access. The stock market, whether it be a fund or an alternative asset, getting access to gold or investing in unlisted venture capital assets like ours. The ability to do that means that people can move quick. People can take benefit of the opportunities that present themselves with volatility. If you're sitting on cash or you have money that you can invest or you can rotate your asset allocation from other things into these opportunities, then yeah, it's a tremendous time to be alive and investing and using FinTech and all these other things. To have access is pretty tremendous. I do remember being similarly back in the day on a PC on CommSec, buying things around the GFC. As you say, you couldn't really have done that today. Businesses like Stake that now give you very quick and easy access. Automate the US W8 tax forms and those sorts of things, for relatively low cost, is actually a tremendous opportunity as well that you couldn't even contemplate back in the day. At Citibank, when we were trying to set up some Australian institutional clients the steps and the forms and the things we'd need to go through to actually set them up to trade in the US was quite involved. Whereas these days individuals can do it in a matter of days.
Dexter Cousins 12:32
I want to talk a little bit more about the Equitise business, Johnny. Particularly the journey that you've been on. I consider us as being good mates, it's been fantastic to see the growth of the business and the journey that you've been on. I guess for our listeners, what's that actually been like? You mentioned that you got a sore head when you woke up and it's been challenge after challenge. What have been some of the highlights for you as you've gone through that journey?
Jonny Wilkinson 13:07
Thanks. and yes, we are good mates. AWe have had sore heads together. It has been a long journey. We started the business with an expectation that the laws were going to change to allow for equity crowdfunding in Australia. So in 2014, when we got accepted into the H2 accelerator and we quit our jobs, it was slated to change in a relatively short period of time after. Within six to 12 months. Not long after that all happened there was a change of government and we realised it was going to be delayed by considerable amount. Having quit our jobs, taken on some money, and had begun building the investment platform, we didn't know what to do. We quickly got on a plane and went to New Zealand. There was always an idea of doing Australia and New Zealand and then taking on Asia Pac. We got to New Zealand, we spread out our wings, went through our networks. We cold called people, we sent everyone emails, LinkedIn connections, and proceeded to have meetings with all the venture capitalists, angels, lawyers, accountants and people in the early stage capital markets that we could. We met with the regulator, the regulator was very encouraging in what we're doing. Then we came back to Australia, we had a board meeting, there was only Chris and I on the board at the time, but we had a couple of advisors. We quickly made the decision that New Zealand was what we needed to do. The next day I got on a plane and moved to New Zealand Ffor 18 months. We got the business quickly set up and licenced over there. The process of moving to a new country, we lived in a youth hostel for a long period while over there getting set up. Living off savings and sniff of an oily rag. Having to do that to get the business going and navigating all those challenges was difficult. Very lucky to have good family and friends and other people around me for support to allow that, which was great. From there the process of actually getting the legislation changed to allow for equity crowdfunding was pretty arduous,. It took a lot of time, took us pushing from a lot of different angles. We had to lobby the government and the opposition. We went to Canberra a few times. I have a funny story about James Bond, who was the head of the Financial Services Council for Economics and me going down to Canberra right after the there was a big security scare. Each of the offices of Senators and parliamentarians we went to go meet, their guy at the front desk had to call them up and announce who was coming. He was calling up and saying I got James Bond and Jonny Wilkinson to see Senator Sinodinos. You can tell he was getting some pretty bemused responses.
Dexter Cousins 16:16
Massive disappointment when they turned up the reception and you were standing there
Jonny Wilkinson 16:23
Even more James Bond wasn't there. It was a very difficult process. We spent a lot of time and a lot of shoe weather trying to get people involved and decision makers looking at it. There was a lot of things happening that were diverting the government's agenda and policy focus at the time. That was really difficult. We were lucky to be a part of some of the founding people involved with FinTech Australia. FinTech Australia has been an amazing platform for us to help get access and lobby the government. By virtue of that I was lucky enough to be put on a FinTech advisory panel to the government. Which again was another avenue we were able to use. We just have to go about getting the laws changed, which is no mean feat. I'm never going to try and start another business where I need to do that ever again. That was obviously a lot of time and energy and difficulty. We had to work with ASIC and make sure that we got regulations in place and then get licenced again in Australia and get going. Look, there's been a fair bit to do. We also had the usual growing pains of businesses, working out to get get funded. Paradoxically, it's harder for us to raise money for ourselves than clients a lot of the time. We've been through the usual travails that are all startups get to. While we like to think we're still startup in some ways, we've been going for a while. It's been fun. It's been a roller coaster, but there's plenty more to do and we're pretty excited.
Dexter Cousins 18:13
How many people do you have in the business?
Jonny Wilkinson 18:15
So we're a team of 10. Split pretty equally across technology, marketing, deals and management. We work pretty collaboratively. We've got our own proprietary technology. Our marketing team works with each of the companies we are raising money for, as well as doing the broader Equitise marketing. We've got of great guys and some juniors that help out in the running of the deals. Then there's the management side. It's a decent size. We're hopefully looking to grow a little bit in the next little while and it's exciting.
Dexter Cousins 18:54
You touched on this a little earlier, Johnny, I guess around the significant impact a business like Equitise can actually have on the economy. We've mentioned Xinja, that was your first cab off the rank. Two years on from that they're out there raising a huge amount $400 million AUD. It must be really satisfying to sit back and see the level of impact you're having on the industry.
Jonny Wilkinson 19:27
Definitely, it is amazing. It's something that we're very proud of. One of the things that kind of gets us going and out of bed every day is not only do we get to speak to amazing people doing tremendous things, but a lot of the companies we help go on and do well and keep on growing and give people jobs and all that sort of stuff. It's very rewarding, and it does deliver a reasonable amount of impact, I think. Private companies are the lifeblood of the economy, and they do drive growth and employment. For instance, not only Xinja but actually the second company we ever raised money for out in New Zealand works in a pretty niche space in funds management and life insurance. They are variable annuity provider, which doesn't sound sexy at all, but they provide financial products to retirees, that gives them certainty in life and they will get a annuity for the rest of their lives. They credit us, we help them with their first raise, if we hadn't helped them, they don't think they would have got that money and may not have been able to go on. We've now raised money for them four or five times and they're looking as though they're gonna potentially list or do something pretty interesting next year or so. To have watched them grow, they now have more than $250 million funds under management. They weren't even licenced when we first raised some money. All therse sorts of things that you see happen over time and the impact and what that brings is tremendous. As I said with these guys, they're the only licenced provider of this sort of product in New Zealand. They're doing a great job of providing a pretty essential service and product that does give these retirees some certainty and peace of mind in retirement.
Dexter Cousins 21:27
Have you got any exciting deals in the pipeline that you can mention at the stage?
Jonny Wilkinson 21:33
Yeah, we've got lots of exciting things, actually. With COVID and where everything's been of late, we've been holding off a little bit. We also have an exciting new platform, we've rebuilt the technology from scratch. That's quite exciting. Coming up, we have Bricklet, which is a fractionalized property play, which is quite exciting. You can now actually be on title rather than buying units and a fund or some sort of product and own part of the property. So that's quite exciting. We've got another little business that are doing authentic, certified organic, whole food. They're a bakery that are doing quite well. We've got a couple of exciting sort of the tech businesses coming through. Humaniti a personal finance up where you can actually earn money. Yeah, there's a lot of exciting things coming through in the short term and then were stacking of the pipe and there's some exciting stuff coming for the second half of the year.
Dexter Cousins 22:54
Johnny, it's been fantastic to have you on the show and mate a little bit different a chat you over a microphone rather then over a beer. Nonetheless, I never get sick of hearing about, not only the story of Equitise, but all the great work that you're doing. I think people often underestimate the importance and the role that you guys play and hence why we're just massive supporters of everything that Equitise do.
Jonny Wilkinson 23:21
Thanks a lot mate. That means a lot. We do do take a lot from that. It's nice to hear that and have people understand that. I look forward to having a beer and talking more sometime soon.
Dexter Cousins 23:36
Well, that's the end of the show, folks. Thanks for tuning in. And thanks to our partners FinTech Australia. Remember to subscribe we're on iTunes, Spotify, Amazon, Google and all of your favourite players. Check out the show notes for additional info on our current opportunities. If you'd like to sponsor the show, or you're looking to hire game changing FinTech talent, check out tieronepeople.com or contact talent@tier onepeople.com
