What are you doing on April 1st? At PledgeMe, we’ll be putting any April Fools jokes on hold while we celebrate.
Even though it’s a day normally synonymous with silliness, a decidedly unfoolish regulation to legalise crowdfunding investments will be launched. We hope this will democratise investment – making it more accessible, transparent and cleaner through technology and your crowd.
Yes, New Zealand is finally making the long-awaited move into the equity crowdfunding space. At PledgeMe, we’ve been watching and waiting for two years – and personally, it’s a bit longer if you count my Master’s thesis on crowdfunding. Overseas, they’ve been shaking their money makers in the space for three years (in the UK) and six months (in the US). Some of the reports coming out show how valuable this new form of funding is, and that it does support further raises.
This will allow businesses to raise up to $2 million a year through licensed crowdfunding websites, such as Pledgeme, by issuing shares or other incentives to the public.
Under current regulations, crowdfunding businesses are prevented from offering pledgers any financial return for their kind support. The new regulations will empower businesses to do so without the burden of whipping up a formal prospectus or getting bogged down with more extreme financial reporting obligations. (Simultaneously raising capital and running a business is already enough of a challenge in itself, amirite?)
Why is this exciting?
It will streamline and educate investment rounds for newbies.
It moves investment from just a strategic play for the angel investors, venture capitalists and ballers of this world. With the crowd now deciding what’s worth investing in, we’re going to see those ivory tower barriers turn into bridges. Smaller ventures, which previously may have been overlooked by investors will now get the support of their networks – which might grow into towering support of its own.
It’s going to make those initial smaller raises from family and friends a lot more transparent – you can actually publicly share it even without a public prospectus, and everyone can see Uncle Jim got on board (and follow suit). Everyone has 50 friends, and your personal base of passionate people who really believe in your fledgling business will want to help you out. These are your ready built backers, and brand ambassadors. It’s about more than just the money.
But, you can raise up to $2 million – though, as we know in startup land, every little bit counts. The average raises overseas currently sit between $80-120k.
Fear not, lovely incumbents – crowdfunding in the equity space isn’t going to remove the need for angels and venture capitalists, and doesn’t stop capital from being matched further downstream.
So in the lead up to April 1st, we’re super stoked to announce we’re going for it – we’re putting our stake in the ground and going for the license that will let us help Kiwi businesses – which lines up with our basic mission to help Kiwis fund things they care about. And, oh, how they care about entrepreneurship!
You should be excited! We’re excited. And we would love for you to join us on this adventure; we want our crowd to help us paddle in the right direction. If you have advice, if you want to partner, if you want to adopt-a-business – let us know! Let’s help Kiwis fund things they care about.