Posted By Anna
“It’s not Dumb Money, it’s Love Money”

It’s amazing how fast the last month has flown by! We thought it might be time for a quick update on all things equity crowdfunding, so here goes:

Licensing update

The Financial Market Conduct Act came into effect 1 April, wahooo! We celebrated in the office, and hope you did too?

Sadly – this doesn’t mean we’re licensed yet though. We’re working through the process with the FMA (who is regulating everyone going into the space) and it’s definitely going to take a few weeks to dot all the i’s and cross all the t’s. Since we’re all building this space as we go, we want to make sure we do it right.

How it could work

A lot of people have been asking what will be required to run an equity campaign. It will be a bit more than the current rewards side for sure, so it’s good everyone is asking. Here’s the minimum info that we expect we’ll need to get companies up and running with equity crowdfunding:

  • Company Name (as in the Companies office) and location / sector

  • Team details (Directors and Senior Managers)

  • Basic info around Idea, Market, Exit Plan / Treatment of Dividends

  • Financial Accounts created by an accountant or pulled from Xero (up to past three years, dependent on how long the company has been trading) – bonus points if audited.

  • Financial Forecast for the next three years – including money raised

  • Images from business / team in description / browse box

  • Business plan

  • Valuation of the company

  • Equity on offer (min target, and max overfund)

  • Rewards and a pitch video will be optional, but recommended.

The pricing will be similar to our model now (5% success fee), though there will be a few legal costs at the end (getting the final share registers and everything set up), and a cost to run background checks.

We’ll also have a Q&A forum for potential investors to ask companies questions (or offer support), and a shareholders communication portal after the campaign is successful.

Crowd update

We’ve been talking to literally 100’s if not 1000’s of people about equity crowdfunding – from all walks of business and life. The semi-overwhelming response has been excitement – using technology to make raising equity funding more transparent and efficient has really resounded with the crowd.

Our favourite comment so far though, came from a craft brewery that is looking at launching with us. When we mentioned some areas of the eco system were sceptical that equity crowdfunding wouldn’t be smart money – he responded with what is now our favourite blog title ever “it’s not dumb money, it’s love money”. Through our talks, the excitement of really skilled everyone (business people, lawyers, accountants, designers) has been infectious. They’d love to invest small amounts AND help if needed. So instead of a handful of smart investors – you could have hundreds of savvy people backing you and ready to jump in and help.

Shout out if you’d like to chat to us about this a bit more!

2 comments found

    Jerry Wade

    Hi Anna and Team, I have a project creation ready to go but am not sure which way suits both sides best (rewards or equity) as licences not granted yet and FMA timeframe not clear. I shall try to call Anna to get a better idea but she must be very busy. If anyone else can give me a bit more direction, it would be greatly appreciated. Thanks guys.

    Jerry Wade,
    Hardcase Limo Ltd.,
    (09)6264660.

    Reply

      anna

      anna

      Hey Jerry – sorry for the lag! It really depends on what kind of relationship you want with your pledgers, and how long you’re willing to wait for the equity space to get up and running 🙂 Your relationship will be longer term if you go equity as they’ll have shares in your company, whereas with rewards your formal relationship will be done once you’ve completed your rewards. We’re not sure how long the equity licensing process will take, whereas rewards is all go now 🙂 Anna

      Reply

Leave a comment

Your email address will not be published. Required fields are marked *