On a remote island in Bass Strait, not far from Flinders Island, a tourism development funded by hundreds of investors is being proposed.
A six-bedroom accommodation house planned to be built on Little Dog Island is the brainchild of tourism developer Clem Newton-Brown, a former Victorian politician who owns other tourism accommodation facilities on Tasmania's Picnic Island and Flinders Island.
But for his latest venture he has turned to crowdsource funding rather than bank funding to get the project off the ground.
"We've got several hundred investors who are part of the business," Mr Newton-Brown said.
"They don't have an operational role, but they do own a small share of what we're doing.
"It's a great way to get a community of supporters who are passionate about islands and experiences in Tasmania."
Mr Newton-Brown, through his company Tasmanian Islands, owns 17 hectares of land on Little Dog Island where the tourism development is proposed to be built.
The company's investors all part own a slice of the island and also the tourism development.
"Some of my shareholders put in as little as $100, but they do own a share in equity in the business and the business holds the freehold title to the island," Mr Newton-Brown said.
Are more property developers turning to crowdsource funding?
Crowdsource funding is a relatively new form of capital raising with the Australian government first allowing start-up businesses to turn to crowdsource funding in 2017 when amendments were made to the Corporations Act 2001.
Companies eligible to use crowdsource funding platforms cannot have any more than $25 million in consolidated assets and annual revenue, and can only raise up to $5 million in any 12-month period, according to ASIC regulations.
Matt Vitale, the co-founder of one of Australia's largest crowdsource funding intermediaries, said since launching in 2018 three of the 200 companies that have used his platform have been tourism-related businesses.
"The CSF [ crowdsource funding] regime is still relatively new in Australia and has been a resilient source of funding even during the recent macroeconomic challenges and rising interest rates," Mr Vitale said.
"The size of more mature equity crowdfunding industries overseas suggests the Australian industry has more growth ahead as it ramps up and more businesses become aware of how it can be a really beneficial source of capital and a marketing exercise.
"The businesses that do well with CSF are interesting, have a story to tell, and appeal to a large audience of investors.
"Tourism is fun and emotive, so there's a huge opportunity."
While there are benefits, crowdsource funding is considered high risk due to start-ups having a higher failure rate and in the tourism space it relies on proposals gaining development approval.
Island development to be scrutinised
Mr Newton-Brown agreed there were opportunities for property developers in the crowdsource funding space.
"It's a new way of involving the community into having ownership of projects," he said.
His Little Dog Island tourism project, which is somewhat controversial as the island has historically been used by locals for amateur mutton birding, needs to be approved by the Flinders Council before it can be developed.
Under the proposed plan the accommodation, which includes six bedrooms, a communal lounge, and kitchen, would primarily host groups.
Guests would be "prohibited from entering the rookery" and it would be closed during the birding season.
Weed and pests such as cats, possums, and mice are also proposed to be removed from the island and little penguin refuge boxes installed to help regenerate the area.
Guests would be taken to the island by boat or kayak.
Mr Newton-Brown also hoped to work with the local Aboriginal association to offer cultural experiences, particularly around mutton birding.
Flinders Island Aboriginal Association Incorporated chairperson John Clark said the proposal did have tourism potential.
"If it creates employment, if it brings more people here, then that helps everybody else. So, as an organisation, we're not opposed to it," Mr Clark said.
The development is expected to go before the Flinders Council in the coming months.
