You could invest in Australian neobank Xinja for as little as $255

Alison Banney 4 December 2018 NEWS

Xinja is launching its second equity crowdfund in early 2019: Here are four things you need to know.

Digital banking startup Xinja, which is building a completely digital bank run entirely through an app, has announced its second round of equity crowdfunding to take place in early 2019. The process of equity crowdfunding invites everyday Australians to invest in the banking startup and buy shares in the company at an early stage. Xinja's first crowdfund raised $500,000 within hours, and a total of $2.7 million with shares prices at $1.25 each. This time the startup is targeting a raise of up to $5 million.

The concept might seem intimidating to young retail investors, but it's actually a lot easier (and cheaper) to get involved than you might think. CEO and co-founder at Xinja Eric Wilson told Finder the answers to the four most common questions people have around equity crowdfunding.

How much does it cost to invest in equity crowdfunding?

It's often cheaper to invest in equity crowdfunding than it is to buy shares on the ASX. Shares in Xinja for this second round of crowdfunding will be priced at $2.04 each, with a minimum investment of $255 required to take part. There's no other costs involved (e.g. no brokerage fees). The ASX on the other hand requires a minimum investment of at least $500, plus brokerage fees will apply.

Wilson told Finder that over a quarter of investors who invested in their initial funding round invested just $250, and 68% invested less than $1000. The minimum investment for its next round will be $255.

Can anyone invest?

As long as you're an Australian resident who can meet the minimum investment requirement, you can invest in equity crowdfunding. Wilson said 25-34 year olds invested the most frequently in Xinja's first funding round, and 82.4% of investors were males. Of the women who invested, the majority were aged between 25 and 34.

Is equity crowdfunding safe?

"The fundraising is regulated by ASIC and conducted through a third party," said Wilson. However, when you buy shares in startups via equity crowdfunding, the shares aren't publicly listed like they are when you purchase shares in ASX-listed companies.

"You should only invest what you can afford to lose. It is a start-up, and confident as we are, things could go wrong."

How do I make money via equity crowdfunding?

"The offer is attractive to retail investors now because the share price has already increased, and will rise further (we hope) as Xinja grows," said Wilson. Shares have already increased in value over 60% from the first funding round, jumping from $1.25 to $2.04 a share.

"We hope that as the company performs, your shareholding will also perform. In the short term, when we do turn a profit, we will be looking to put some money back into the business to grow it." Xinja currently has an app and a pre-paid card in the market and is looking to launch more deposit products when it receives its full banking licence.

If you're interested in taking part in the equity crowdfunding, you can register your interest now via Xinja's website.

Learn more about the digital banks launching in Australia

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