Best equity crowdfunding platforms in New Zealand

Equity crowdfunding allows companies to raise capital from their customers, community, and external investors. Getting outside investment can help a company grow faster and expand into new markets. More and more companies are experimenting with equity crowdfunding as a way to raise capital to grow their operations.

The equity crowdfunding industry in New Zealand has been operating since 2014 when the process was legalised and has matured considerably in that time.  The major platforms in New Zealand have started to find their feet and to differentiate themselves from one another.

Equitise

The Australian equity crowdfunding legislation has been slow to come into force, so Australian platform Equitise has been trying out their model in New Zealand. They have built a reputation for focusing on early-stage tech companies and high-risk food and beverage companies. Examples include 1Above rehydration drink and Skins performance sportswear. They allow companies to raise privately and publicly from both big and small investors.

Equitise appears to have completed around $11 million in offers in New Zealand. They charge an upfront fee and 7.5% of the funds raised. You can see their latest stats and fees on their website: Equitise

PledgeMe

PledgeMe allows companies to offer rewards, debt or equity to the crowd. The platform tends to attract social enterprises and early-stage companies with a strong fan-base. The platform is simple to use and companies go through a crowdfunding training program which means that the campaigns are generally well put together. The campaign videos from their successful campaigns are well worth a watch. Successful campaigns include Parrotdog, Yeastie Boys, and Eat My Lunch (a debt campaign).

PledgeMe appears to have completed at least $12 million in offers in New Zealand. They charge 6.5% for equity campaigns plus another 2.5% on any pledges that use a credit card. You can see their latest stats and fees on their website: PledgeMe

Snowball Effect

Snowball Effect was the first platform to launch in NZ. Snowball Effect is focussed on larger raises for more established companies. They generally work with medium-sized growth companies in the tech and consumer space. Snowball Effect has also been conducting private offers targeting their own database of high-net-worth and sophisticated investors. They have recently added a share registry service and an independent director matching service. Successful offers include Zeffer cider, SOS beverages, and Invivo wines.

Snowball Effect has completed around $40 million in offers in New Zealand. They charge an upfront fee and 7.5% of capital raised. You can see their latest stats and fees on their website: Snowball Effect

Other platforms

Other platforms include AlphaCrowd, AngelEquity and Crowd88. Crowd88 is another Australian platform that is expanding into New Zealand and AngelEquity are the online part of Tauranga-based Enterprise Angels so it is only open to wholesale investors.


Choosing the best equity crowdfunding platform for you

As an entrepreneur, it’s worth doing your homework before choosing a platform to work with. When considering an equity crowdfunding platform to raise capital on, there are several things to look out for:

  1. How well does the platform know their investors?

If your offer will just be spammed out through a bulk newsletter, it won’t get as much traction as a platform that will do the hard yards (behind the scenes) to help prepare and promote your capital raise. To do that, they need to have a pretty sharp knowledge of their investor base. Ask about their internal CRM, investor relationships, and how proactive the platform will be in helping promote your offer to their own investor base.

  1. What do the big fish think?

Large investors make a big difference to a successful capital raising. Even if you offer shares to the general public, you’ll likely still need some large investors such as angels, venture capital investors, or a private equity firm. Find out whether your platform can play alongside the big kids. Look for examples of large investors who have invested into offers on the platform.

  1. How much has actually been raised through the website?

Some of the platforms count offline and pre-committed investments towards their published totals. The FMA has recently been cracking down on this practice, so most of the good platforms know exactly how much did and did not come through their coffers. Ask about the average investments sizes, how many people invest in each campaign, and how many people in each offer are repeat investors.

  1. How easy will it be for your crowd to invest?

If you want your customers to become investors, then the platform needs to provide a simple sign-up process and a good experience for first-time investors. Try signing up for each of the platforms yourself and ask them about how much effort they have put into streamlining important details like payment processing and compulsory anti-money-laundering checks.

Overall, equity crowdfunding can provide a great source of capital investment, but you need to choose the right platform that suits you and your potential investors. The industry is growing in New Zealand as a viable source of capital for growing companies.

Disclosure: This article was written while working at Snowball Effect. The information in the article is based on publicly available information. You should consult the FMA’s information on equity crowdfunding for issuers before deciding which platform to work with. 

Equity Crowdfunding is the Ultimate Customer Loyalty Program

Alex Tynion from SeedInvest and I sat down recently to talk through some of the things that we’ve learned from helping the first few companies who have “tested the waters” under the new Reg A equity crowdfunding rules. Regulation A is an equity crowdfunding rule that allows private companies to raise money from the general public. So far, we have helped three companies on SeedInvest to reach over $10M in indicated interest from over 2,000 people each.

There are some common mindsets and practices that we’ve seen across the companies that have been most successful with equity crowdfunding.

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How to value a startup

Company valuation is one of the most misunderstood parts of early stage investing. Both investors and entrepreneurs get themselves endlessly tied in knots trying to calculate a startup’s “value” despite the fact that the whole concept of valuation is entirely artificial. How to value a startup is one of the most common questions I get when I present to entrepreneurs on the topic of venture capital and online angel investing. What worries me the most is that talking about valuation in isolation can distract people from the real issues of economics (amount of cash invested) and control (percentage equity offered).

Social media for executive profiling
The value of a startup is determined by the willingness of the entrepreneur and the investor to agree on a price that works for both parties.

One of the most common questions that you hear entrepreneurs and VCs ask each other is “What’s your valuation”? It seems like a sensible question and it’s a tempting way to compare different companies who are raising capital, but the idea of a single number as an agreed valuation for a startup is a dangerous distraction from the real issues. The term “valuation” is simply a useful shorthand to talk about several independent variables. These variables can be quickly forgotten when you start a conversation with the issue of valuation.

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Dave McClure on equity crowdfunding

Brant Cooper and Patrick Vlaskovits interviewed VC investor Dave McClure as part of their book the Lean Entrepreneur. The Lean Entrepreneur was published in 2013 and I picked up a copy after seeing Patrick Vlaskovits speak at the Innovation Warehouse in London.

Patrick has a really practical and grounded approach to innovation, growth hacking and the world of startups. He’s been an inspiration to me and has contributed a lot back to the community through mentoring and coaching various startups.

After reading the book last year, I got a copy of the audiobook on Audible. Some of the checklists and bullet-points don’t survive the transition to audio that well, but overall the audiobook was excellent and I recommend it alongside the Lean Startup as one of the key audiobooks for entrepreneurs and investors.

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Mark Suster and Clayton Christensen on equity crowdfunding

In 2013 Mark Suster a leading VC investor and Clayton Christensen a leading business author sat down at Startup Grind to talk about disruptive innovation and startup investment. Their conversation touched briefly on the subject of equity crowdfunding. Both Mark and Clayton are extremely cynical about equity crowdfunding. Some of their concerns are sensible questions about an emerging industry. But what they were secretly doing was arguing for the old model. I’m a big fan of Mark’s blog and Clayton’s books but they’re wrong about the disruptive potential of equity crowdfunding.

VC investor Mark Suster and business author Clayton Chistensen at Startup Grind.
VC investor Mark Suster and business author Clayton Chistensen at Startup Grind.

By betting against against equity crowdfunding, Mark Suster is betting against the internet. I believe the internet will do the same thing to early stage finance that it does to all industries. Namely, make them more competitive, connected and democratic.

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Equity crowdfunding at Seedrs

Seedrs provides a tool that startups can use to raise capital from their friends, family, customers and the crowd. This process is often called “equity crowdfunding” because it’s like Kiva or Kickstarter, except that the investors get equity in the company instead of a product or a loan. In January 2014, I joined Seedrs as part of the marketing team.

Seedrs Team Wired Magazine
The Seedrs team have been featured in Wired, TechCrunch, the Financial Times and the Wall Street Journal.

At the end of last year, Seedrs raised 2.58 million pounds from over 900 investors using their own platform. That means that in my new marketing role, I now have over 900 bosses. I feel very accountable for the success and growth of the business. In this blog post, I want to share two main things about my new role, the expanded view of marketing that we’re taking at Seedrs, and the way that we’re incorporating lean manufacturing habits and processes into our team culture.

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