Private Equity Crowdfunding

Running a private campaign on PledgeMe.Equity means companies can go out to their crowd, and their crowd only, to secure investment. Companies can raise money through their personal networks, professional acquaintances and customers, having a bit more control over who sees their information while still going through the PledgeMe process.

Why would you choose to do a private campaign?

Over the past few years we’ve talked to hundreds of companies, and the idea of running private campaigns came up quite a lot. So in 2016 we launched the ability for companies to run private PledgeMe.Equity campaigns.

The two main reasons people told us they wanted to run a private campaign were:

1. They wanted to run a friends and family round (this will be especially helpful for very early stage start ups) but weren’t quite sure how, and

2. They wanted to raise through their crowd of customers without showing the world what they’re up to just yet.

Friends and family

Going out to friends and family can be difficult for many entrepreneurs. Not just from a legal perspective, but also from a “how do I actually do that??” perspective. Companies have told us they want to know they’re going through the correct legal process, and providing the information that their family and friends would need to make an informed investment decision in their own time (rather than over Sunday dinner at Aunt Edna’s place).

A private PledgeMe.Equity campaign provides a structure and a system so both parties are best informed of the plans, financials, risks and possible returns. This is useful for founders and interested investors alike.

Not ready to show the world but see the value in their crowd

Some companies we work with are doing some pretty incredible things but they aren’t quite ready to tell the world (or the National Business Review). In most cases these are high growth companies or businesses with close competition around the same stage in the market.

But, they see the value in getting their crowd involved in what they do. If they get their crowd invested they will be selling what the company does because they own a piece of it.

Private PledgeMe.Equity campaigns mean these companies — who have stress tested their idea, have got a crowd of people ready to invest and who have a clear plan — can push go without any of the public focus that comes with a public campaign.

What’s the real difference between public and private?

In terms of readying your company for investment: not much.

Regardless of running a public or a private campaign, a company is going to need to follow the same process to prepare their documentation.

The only difference is that instead of the offer being visible to anyone on our website, it will only go out to those that receive the link to the page. You’ll choose who you send it to, but the page itself isn’t password protected. If someone gets the link they will be able to see the page. One potential difference for a private campaign is that some of the costs around getting your campaign ready may be reduced or eliminated (compared to public campaigns). Things like pitch videos cost money and, depending on the private campaign, may not be necessary.

Why would you use PledgeMe instead of raising capital yourself?

PledgeMe charges a 6.5% success fee on the total raised for all campaigns which reach their funding goals. This cost isn’t for everyone and we know how important cash is for early stage companies. However, there are a few key reasons companies come to us and see value in our service:

 

Company hygiene. In order for any company to use our platform they have to provide a full list of documentation around the investment (which may not be on hand at Aunt Edna’s dinner table). So the process itself is transparent. Companies have to put together a proper business plan, constitution, financials and valuation with assumptions so investors can assess the potential risks and returns. You also get feedback on your documentation, not just from us but from your crowd before the campaign goes live, often in the form of a Pitch Kitchen. This perspective can be pretty powerful.

 

The process is legal. There are rules around how you can raise capital and who from, that companies often don’t understand. By crowdfunding, you’re going through a streamlined process, and can know that you're raising money in a way that complies with the rules set out in the Financial Markets Conduct Act. You still need to sure that your information is correct (eg. not false or misleading).

 

•  A crowd of supporters selling what you do. By going through a crowdfunding process you’re inviting your crowd into your company. Not at an operational level, but they will be more likely to sell what you do because they own a piece of you. We’ve heard many stories of walking talking brand ambassadors coming out of crowdfunding.

 

Taking the personal pressure off asking people close to you. Allowing people to make a decision on their own, but with a clear deadline, is really the best thing for both parties. It means investors don’t rush into something, and it means companies can concentrate on their crowd as a whole, rather than a few people at a time.

 

A strong foundation for growth. Since you’ve dotted your i’s and crossed your t’s the first time around you will carry this knowledge and experience forward for any additional rounds you may do — and your company is already structured to allow for this growth so your eyes can remain on the prize.

Next steps?

Get in touch with us on equity@pledgeme.co.nz, and we can talk to you about your plans. Just send us through:

  1. Who you are and what you do (if you have a business plan or pitch deck, attach that!)

  2. What you’ve achieved so far

  3. Why you’re raising the money, and

  4. What you think the deal will look like (eg. valuation, amount you want to raise etc).

 

Or, head straight to PledgeMe to create your request: