How will this work in practice?

Dylan has come up with a new idea for a pet tracking device, which will enable pet-owners to track their lost companion using their mobile phone.

Dylan’s simple collar-tracking device works really well in the field but needs significant refinement to improve its saleability. He estimates that this will cost $400,000.

Dylan initially seeks funding from family and friends. He manages to secure $50,000, but is forced to look to traditional lenders for the remaining $350,000. But given his limited track record and inability to meet high interest loan repayments, lenders consider Dylan’s business proposition too risky to invest in. Dylan is forced to put his plans on hold.

With the introduction of new CSEF laws, Dylan decides to raise the money he needs using CSEF. He will be able to access CSEF funding without needing to convert his proprietary company (PetFinder Pty Ltd) into a public one—knowing that the company will have some additional obligations, such as giving shareholders annual reports, providing greater transparency on PetFinder Pty Ltd’s progress.

Dylan is able to secure the additional $350,000 he needs to develop a fully refined prototype.