We all know that if we need a loan, a place to go for it is to a bank but where do we go to if we need equity capital to start, buy or grow a business? That’s right, there is no industry catering for this. Those fortunate to have wealthy parents, a ‘wealthy uncle’ or a friend who has struck it rich, can invite them to invest. As for the rest of us, we see opportunities pass us by. If we had raised the capital needed, we would have expected to offer a better-quality product or one at a lower cost – both of which would be positive for our economy and for our customers, who would get better value for the money they spend.
Many would be entrepreneurs are unable to start businesses due to not having sufficient capital and many well-established, profitable, businesses forgo growth opportunities due to not being able to secure the necessary capital. And many businesses have been forced to close because they were growing too quickly – their growth in sales outpaced their ability to fund the working capital needed to support it. These are lost opportunities for our economy and lost employment opportunities.
For a business and an economy to achieve its potential, it needs to secure the capital needed to achieve it. The most successful countries are those that have the most efficient financial markets – where good projects and good businesses secure the capital they need. In poorer countries access to capital is difficult to non-existent.
In Australia, top listed companies have easy access to equity capital, while unlisted companies are essentially deprived of capital. This must change. It is in our interests to ensure that good projects and good businesses attract the capital they need to achieve their ambitions.
CLA intends to achieve this by substantially repealing financial services legislation – making it a lot easier, and cheaper, to alert prospective investors of opportunities to invest in companies and projects. For example, currently a prospectus is basically a compliance document written by lawyers and is of little use to prospective investors – because it does not provide the crucial information needed to assess the investment opportunity. That must change. Prospectuses need to be meaningful documents.