What is it?
What is Equity Crowdfunding?
Equity crowdfunding helps Kiwis fund the companies they care about. Our PledgeMe.Equity platform helps businesses harness the power of their crowd to raise capital without the need for a full prospectus. How equity crowdfunding works is a company (like yours!) that can exchange shares for investment. This means your crowd becomes shareholders and ambassadors for your company. Companies can raise up to $2 million in a 12 month period through a licensed platform (like us). The Financial Markets Conduct Act 2014 regulates this new type of capital raising.
Is Equity Crowdfunding for you?
Equity crowdfunding is for entrepreneurs, business folk, small to medium enterprises or any business looking to raise capital (usually) in the early stages of their business. Traditionally capital came from bank loans, angel investment, help from friends and family, or by dipping into your own savings. Equity crowdfunding is a new capital raising tool that’s more engaging and transparent. It can help Kiwis who have a great business plan, some traction, and excellent people, but can’t start up or grow due to a lack of finance. If you’ve got a crowd and a solid plan to take your business to the next level then equity crowdfunding might be for you.
CrowdfundingU (see below for details) = $750 + GST for those seeking to raise less than $100,000, and $3,000 + GST for those seeking to raise more.
Success fee = 6.5% zero rated of total raised if your goal is met by the deadline.
Credit card fee (charged to your pledger) = 2.5% + 25c (if they choose to pay by credit card).
Example: A company successfully raises $300,000 through their crowd.
They’ll pay $3,000 + GST upfront and a $19,500 success fee.
How does it work?
The first thing you do before getting started is make contact with the real people at PledgeMe (1-2 days).
After chatting with us you then register for CrowdfundingU which puts you on the path to launching your campaign as well as allows us to provide help and feedback on your video, pitch, business plan, financial forecasts and other documentation (3-6 weeks).
Then you get ready to go out to your crowd and ask them to pledge investment. (varies depending on campaign length)
When you make your goal, all the verified people who pledged become shareholders in your company and you receive their investment dollars. It’s important to remember you have an ongoing responsibility to your shareholders under the Companies Act.
A private campaign is where companies have more control over who gets to see their offer. If you choose to do a private campaign you can go out to your crowd, and your crowd only, to secure investment. By just going out to your personal and professional networks and customers, you have a bit more control over who sees your information while still going through the PledgeMe process.
There are a couple of reasons why you might choose to do a private campaign.
You have a good understanding of who is going to invest and you know using PledgeMe, with it’s time limit and goal focus for raising funding, will make sure they invest. This is rather than chasing up multiple people over time and trying to nail them down. This works well for initial rounds for startups who are just going out to their family, friends, and immediate networks.
You’re not quite ready to show the world what you’ve been working on. It may be for cut-throat competitive reasons that you don’t want to shout about it yet, or it may just be that you’re the kind of person who likes to do things quietly.
Regardless of why you choose to run a private campaign, the build up to running it is pretty much the same as a normal campaign. It may even reduce your costs for running a campaign, because if you’re not seeking investment from your wider crowd you can spend less on creating a flashy business plan and PR work.
CrowdfundingU is a crash course that will help you and your company prepare for an equity crowdfunding campaign. The programme is designed to be completed over either two or six weeks depending on the scale of your raise.
We’ve realised there is a lot of common things that companies need support with over the course of an equity campaign. So we’ve structured CrowdfundingU to help you prepare all the things (big and small) in a structured format, giving you necessary one-on-one time.
Whether you’re a company wanting to raise a million dollars and make a media splash or just want to do a private friends & family round, CrowdfundingU can help ready your organisation and more effectively communicate what you’re up to.
The programme focuses on the two key elements to a successful campaign. Preparing your pitch to raise money and preparing your crowd to invest.
We’ll give you a deeper understanding on crowdfunding, an insight into identifying and harnessing the power of your crowd and a couple of key ingredients to bake a successful campaign.
The two hour sessions are designed to be part teaching/part doing, with weekly goals to complete. By the end of the programme your organisation will feel ready to show New Zealand (or just family and friends) what you’re up to, and invite your crowd to invest.
What does PledgeMe do?
PledgeMe is here to help. We’re pretty good at it too, PledgeMe has already helped tens of companies and hundreds of projects raise millions of dollars in New Zealand. Other than the basics of operating the platform and hosting campaigns, through CrowdfundingU we support you in planning, provide guidance on putting your showcase documents together, creating effective pitches, videos, and (almost) anything else you need to make your campaign awesome.
We are regulated by the Financial Markets Authority and we have a duty in our licence to understand your offer and understand your background. Businesses of all sizes can benefit from capital and we play a role in helping to present your opportunity both professionally and transparently to your potential investors.
There are some serious things that we will need to do, like background checks and wrapping our heads around your business plan and financials to make sure you’re not being inadvertently misleading. We cannot provide you with financial advice, but we can offer feedback on all the other things that will make your campaign a success.