Aus-merica

Early last month, I spent two days in Melbourne and one day in Sydney meeting with local companies, co-working spaces, government, funders, and startup supporters.

Australia trip

My trip had two goals. Firstly to assess where Australia’s proposed legislation on equity crowdfunding was headed and secondly to get a sense (read sanity check) of whether PledgeMe should hop across the ditch.

Apart from realising that my American heritage felt strangely at home in the rule-focused country, here are my main findings:

Change of government is helping change the law

The Australian government has recently gone through a change of leadership (to the relief of most Australians it seems), and a shuffle of portfolios means there is a new minister in charge of the changes to their securities legislation. The Corporations and Markets Advisory Committee (CAMAC) which wrote the original report around equity crowdfunding has been abolished, leaving Australia with the mouthful of a moniker “crowd sourced equity funding” for equity crowdfunding. Now, after two rounds of submissions, the equity piece is slated to enter the innovation statement set to come out by December 2015.

There is a general sense of optimism around the changes. The new Prime Minister, Malcolm Turnbull, has a background in tech. This seems to leading the industry to believe he will make changes to support SMEs. He’s already shown he is capable of doing this with recent employee share scheme changes.

We believe that government’s role is not to tell citizens, let alone businesses, what is best, but rather to enable them to do their best.” Malcolm Turnbull

However, many predict Australia is more likely to follow the American way of equity crowdfunding. People I spoke to said as much: “Australians like rules”. This means there will probably be investor caps on how much individual investors can invest, both per campaign and per year. This stems, in part, from a general fear from institutional investors that retail investors would lose all their money in this space. New Zealand originally discussed investor caps, but decided not to go down that path. We agree with this. Caps on investment assume that retail investors need protection from themselves. This could be seen as somewhat patronising and counter to Prime Minister Turnbull’s above statement.

There has been some talk recently about the law change excluding debt/peer-to-peer(P2P),  and existing only for public companies. Both of these comments are strange, for the following reasons:

 

P2P

Debt crowdfunding, crowdlending, peer-to-peer, whatever you call it, is two thirds of the international crowdfunding market. Yep, bigger than all the equity crowdfunding and kickstarter-esque platforms combined. So it seems odd that it’s being left out of the conversation. In fact, in New Zealand, equity crowdfunding was actually an afterthought added after one of the P2P platforms made a side comment about it in a meeting in the lead up to our legislation changes. And, it’s a space that we’re really interested in ourselves as it helps more than just companies find funding – it supports individuals, other organisational set up, and social enterprises. So interested in fact, that we’re exploring an SME / organisational product for kiwis.

There are P2P platforms operating already in Australia, but under the old legislation with high compliance costs.

Public companies

Company structures in Australia are different to New Zealand.

In New Zealand, the companies coming through are private companies. They are not tied to the same continuous disclosures that a public company would be required to do, and are not required to create a public prospectus for funding. While equity crowdfunding may trigger the Takeovers Code (eg. a company has more than 50 voting shareholders) and a company may be required to audit their financials if their voting shareholders do not opt out, these companies are not classified as public.

In Australia, if you have more than 50 non-employee shareholders, you immediately move from being a proprietary (or private) company to being a public company (albeit unlisted). This means you are required to have 3 directors (2 need to be Australians) and are required to provide a directors statement, financials and an auditor’s report annually.

 

 

There is a need for funding (and a crowd)

Australia is seeing more Venture Capital funds coming through for tech, a maturing startup ecosystem, and a growth in impact investment. But, there was also a general sense that while Australia is generally wealthy, it is more likely to go into traditional investments (eg. asset classes), not currently into start ups. Also, Basel III has made it harder for SME’s to access bank loans. But there are some companies that need growth funding that aren’t supported by the current ecosystem, with 10% of Australian SME’s stating they have difficulty accessing capital to grow in a recent Deloitte report. Often, these companies either wouldn’t fall in the traditional investment space or would not choose to go down the traditional investment route.

IMG_4069

My conversations made me realise that the other side of crowdfunding (the crowd) had been seriously downplayed in the discussions around legislation changes. Everyone was hung up on the funding (and potential to lose money) and overlooked the other skills, support, and insight a crowd of consumer investors could bring.

I told the story of Brianne from Sorbet pretty much on repeat. How she went out and raised $200k from her crowd in two weeks, but not only did she get cash from her crowd; she also had three chemists invest. There was a problem she’d been working on for weeks if not months, which they came in and fixed in half an hour.

 

 

It’s a big (and complicated) market

Australia is large compared to New Zealand. With five times the population, there is more individual wealth (one person ball parked 10x that of NZ), and there are more layers to bureaucracy (city, state, federal).

There was a comment that Australia is more likely to back Australian owned, and that we would need distinctive entry plans tailored to each city. Which really made us think that if we wanted to go to Australia, we’d need partners. Companies or organisations that reflect our values, but aren’t already in the crowdfunding space.

 

 

It’s a crowded market

There are quite a few players getting ready to launch in the space. Some platforms have already completed their technical development, and there is a sense of waiting to see how the legislation lands.

Some platforms believe  the changes could come through this year (as stated in one of the documents released by government) where others think it will still be at least 6 months before the first platform is licensed and launching campaigns.

There are a range of platforms getting ready to enter the space, some with project based crowdfunding experience, some currently in the equity crowdfunding space in NZ (Equitise, My Angel Invest) and some specific niche crowdfunders (all the property….).

 

 

Where to from here?

I feel like there is little sense for PledgeMe to try and enter the Australian market on its own. But, we are open to partnering with companies in Australia to set up a platform (with us bringing the tech / expertise, and a partner bringing the potential base of campaign creators / presence / brand recognition). Partnering would be a stronger proposition than setting up a new platform from scratch.

So if there are any folk that would like to continue conversations or start conversations, get in touch with me (anna@pledgeme.co.nz). We’re keen to support the democratisation of funding in Australia, and are actively waiting to see how the final legislation pans out.

 

Final thought

For all that’s good Australia, please don’t go down the path of over regulation. If you write 635 pages of guidance for platforms like the USA, you’ve already stifled the innovation of your 140 character fueled future.

 

And…

a big thanks to everyone that took the time to meet with me and share their thoughts on the future of funding in Australia.

One year on

It’s one year ago today that we had our first successful equity campaign – for us.

It was a scary move, going out with our own campaign and asking our crowd to join us on our journey. I joke that it’s effectively the same as getting naked and running through a crowd of friends (and critics). It’s a no holds barred, warts and all approach to growing your company, and it’s not for the faint hearted. But, it worked. In 23 hours we raised our maximum goal of $100,000, and we grew from a team of 2 FTE’s and a board to a family of 186 shareholders, directors and team members.

PledgeMecake

And, we got so much more from our crowd than just the funds. In the last year we’ve gotten everything from strategy sessions to home cooked meals to contacts in Australia to campaign leads to attendees at our pitch kitchens to another round of funding. We’ve been supported commercially and personally. We’ve strengthened existing friendships and made new ones.

With your help, in the last year we’ve gone from $2.9million total pledged through the platform to $8.2million pledged. We’ve had 11 other equity campaigns funded, covering a spectrum of industries – from beer to wind turbines to solid hair care bars. And, we’ve almost hit the 1,000 mark on total funded campaigns. Yep, that’s almost 1,000 campaigns that got the funding they needed to go ahead. Since 2012.

So, I want to take this moment to say thank you. Thank you to our supporters, shareholders, and the growing PledgeMe team. We wouldn’t be where we are today without you. We also wouldn’t be who we are today without you.

AWESOME FOOD AND AWESOME TEAM

 

What does the next year hold?

  • More kiwis funding the things they care about.
  • Us pushing to hit our goal of $8.2million pledged this financial year.
  • Different ways of supporting our crowd, be it new ways help campaigners to new products we offer.
  • More inspiration. More learning. More you.
And for me? Turning 30.
xx
Anna
ps. Here are some other campaigns you might want to check out on the anniversary of our funding:

 

Hitting the max

Maxing out
Last week, two of our equity campaigns reached their maximum funding goals.

Sorbet_-_productSorbet, a climate-neutral cosmetics company, turned to crowdfunding in order to set up their lab, activate their brand and enter a global market. They’ve already had huge success in reducing the environmental impact of beauty products – preventing the production of 32,000 bottles since their launch – and now they have new capital and a great crowd of investors behind them.

Angel Food roughAngel Food, a plant-based food producer, looked to their crowd in order to develop their products and improve on their marketing and sales channels. Already a well-loved brand, Angel Food had no trouble bringing their loyal crowd of vegan and non-vegans alike to their side. With the help of this crowd and their capital, they can now grow their distribution, and continue to offer delicious, familiar, and affordable alternatives to animal products.

The amazing fundraising of these two companies is a testament to the strength of their crowds and their teams – and we think that’s pretty spectacular. We can’t wait to see what amazing stuff they get up to next!

Our Five Cleanest Campaigns Yet

Cleanest campaignsWe’ve gone equity campaign crazy here at PledgeMe! But the five equity campaigns we’ve got on the go aren’t just brilliant business opportunities – they’re also all working to keep it clean in NZ. Read on to find out more about these clever, cool, clean campaigns:

Liquid Waste Treatment Systems LimitedLWTS image

What they’re about: LWTS is first on our list, a Hawkes Bay company who’ve developed the technology required to treat NZ’s wastewater more effectively.

 How they’re keepin’ it clean: Using aerobic granules, LWTS will achieve nitrification, de-nitrification, and biological phosphorus removal at an awesome rate. That’s science-talk for cleaner waterways, and a cleaner NZ. What’s not to like?

 Angel FoodAngel food twitter

What they’re about: the team at Angel Food create alternative foods for people on plant-based diets. They provide tasty choices for mindful eaters, with everything from dairy-free cheese sauces to egg-free magic meringues.

How they’re keepin’ it clean: in a world where our diets are becoming increasingly out of control, Angel Food offers clean-eating alternatives made right here in NZ. Sounds like a pretty spotless suggestion to us.

Tapp LimitedTapp blog header

What they’re about: Ever find calling a cab a drag? Tapp’s taxi app will connect passengers and drivers in real-time, creating a cardless, cashless, and super-streamlined transaction.

How they’re keepin’ it clean: Tapp could change the whole way we travel; taking cars off the road and supporting taxi drivers too. Fewer cars on the road plus happier drivers equals one clean campaign!

Powerhouse Wind Limited
Halfway point

What they’re about: this Dunedin-based tech startup are turning to equity crowdfunding to bring their new turbine, the ThinAir, to a wider marketplace.

How they’re keepin’ it clean: Powerhouse Wind provides kiwis with household wind turbines, offering an energy alternative that’s not only affordable and efficient, but clean and renewable. And we’re clearly not the only ones who think so – Powerhouse’s crowd have got behind them too, helping them power through their halfway point yesterday. Clean energy is clearly killin’ it.

Sorbet by Ethique Limited 

SorbetWhat they’re about: Sorbet launched their equity campaign with us last night at 7pm; funding their hair and skin care line which consists of simple, solid, concentrated products that deliver on results.

How they’re keepin’ it clean: Sorbet isn’t just helping to keep our bodies squeaky-clean: they’re doing the same for the environment. All Sorbet products are long-lasting, sustainably created, and distributed in waste-free packaging. Certified climate-neutral, this company is changing the landscape of the cosmetics world and offering consumers an environmentally-friendly option. If that’s not a clean campaign, we don’t know what is!

So there you have it! Five squeaky-clean campaigns that are doing as much for the environment as they can do for you. Check out all their campaign pages for more information, and help them keep NZ clean.