Mum-and-dad investors will get the chance to buy a stake in Aussie startups under proposed new crowdfunding laws.
Under current rules, startups that use crowdfunding to raise money to expand their businesses can only issue shares to wealthy investors with assets of at least $2.5 million.
The laws, introduced to federal parliament on Thursday, open up that pool to anyone who wants to invest in exchange for receiving shares in the company.
Unlisted public companies with turnovers of less than $5 million will be able to raise up to $5 million a year.
However startups wanting to raise money through equity crowdfunding will be forced to become public companies registered with the corporate watchdog ASIC.
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This provides protection for the average investor Small Business Minister Kelly O'Dwyer said.
"While investors will be able to invest an unlimited sum in crowdfunding, there will be a cap of $10,000 per issuer per 12-month period to ensure that mum-and-dad investors are not exposed to excessive risks," she said.
Unlike public companies listed on the stock market, startups that go public won't have to host annual shareholder meetings or provide audited financial statements for crowdfunded capital raisings worth less than $1 million.
In a nod to the highly competitive and patent-sensitive tech space, they also won't be subject to the same public disclosure obligations as listed companies.
The federal Labor opposition and VentureCrowd, an existing equity crowdfunding platform in Australia, have criticised the requirement for startups to go public.
"There are lot of administrative and legal expenses involved in becoming a public company," said Tim Heaseley, the chief operating officer of VentureCrowd owner Artesian Venture Capital.
However startup veteran and founder of accelerator River City Labs, Steve Baxter, said going public was relatively simple and affordable.
"I think the requirement for public companies is a good level of transparency and the first essential step to make sure that shareholders have their interests protected," he told AAP.
However he warned that investing in startups was risky for the average punter.
"These are liquid stocks, they're hard to sell and they're really hard to make work so I do fear for unsophisticated investors who don't have their head in that space," he said.
The new laws are the first of a suite of innovation policies expected to be announced by the government on Monday.
