The continuum of funding spanning from friends to IPOs has a new component in New Zealand: equity crowdfunding.
Equity crowdfunding allows the public to buy shares in an unlisted company that may be looking to fund growth or a new project. This option provides an alternate funding source for companies that are looking for finance outside of angel or venture investors. Equity crowdfunding campaigns can have a wide range of benefits, including lowering the barriers to investment, simplifying the funding process, gaining passionate early adopters, and widening the reach of a company’s campaign.
In April 2014, equity crowdfunding became legal in New Zealand and has so far raised $7 million for nine successful public campaigns. While investors do need to weigh up the risks carefully, campaigns like these are exciting for their ability to push forward innovative tech and health companies.
New Zealand has three main equity crowdfunding platforms in the market at the moment: Snowball Effect, Equitise, and PledgeMe. BioPacific relishes interacting with companies like these as our interests often intersect and we see exciting synergies.
Companies can raise up to $2 million through these platforms from the general public as well as wholesale investors. So far, campaigns have covered a broad range of areas, from drones (Aeronavics) and mobile apps (SellShed), to cleantech (CarbonScape) and travel guides (TRNZ).
While Australia does not allow equity crowdfunding under its current financial sector regulations, the rules may be changing soon. Watch this space.
By Emma Armitage, Business Analyst, BioPacific Partners