PledgeMe to offer debt crowdfunding
Kiwis keen to invest in their favourite crowdfunding ventures will soon be able to cash in – then cash out.
Wellington-based crowdfunding site PledgeMe has applied to offer peer-to-peer lending, or ‘‘debt crowdfunding’’, which will allow people to lend money to organisations to help fund additional projects – a bit like a bank.
PledgeMe chief executive Anna Guenther said debt crowdfunding was another way for New Zealanders to fund the projects they cared about.
‘‘[It] will allow organisations – from companies to co-ops – to reach out to their crowds so they can fund bigger and better campaigns,’’ she said.
‘‘An organisation’s crowd will be able to lend it money and the organisation will pay their crowd back with interest.’’
Debt crowdfunding was another way they could offer an alternative to banks and selling shares, Guenther said.
‘‘Organisations which can prove they can repay the loan will be able to offer a campaign on PledgeMe.
‘‘Their crowd will [then] pledge and if it is successful they’ll receive the money to go do the thing they said they were going to do.’’
The difference with PledgeMe’s offer was that organisations must pay back the money they were lent, plus interest, she said.
They must also offer potential other rewards to their lending crowd, Guenther said.
‘‘It might suit organisations who don’t have massive growth plans, but need investors.’’
It would be a ‘‘transparent campaign-led platform’’, she said.
‘‘Campaigners will be able to reach out directly to their crowds of friends, family, supporters, and customers ...
‘‘This means growth companies, social enterprises, not-forprofits, schools, co-operatives and communities – organisations wanting to involve those around them to achieve their purpose – will be able to borrow from their crowds.’’
PledgeMe was not backed by a bank, like many other peer-to-peer platforms, Guenther said.
‘‘This means borrowers will have a greater say over what, when and how they borrow, and their crowds will be the decisive factor.
‘‘This means the relationship campaigners will have with their lenders will be a lot different and, we believe, a lot more beneficial.’’
But what if organisations don’t pay back lenders?
‘‘We will do some basic assessments at the start on the organisations financials, as we don’t want to let campaigners go on the website if there’s no way they’ll be able to repay.
‘‘That said, it’s up to the lenders to assess the information the campaigner provides and decide if they’re ok with the risk.’’
PledgeMe also had a debt collection partner who would ‘‘come in as needed’’, she said.
Subject to gaining a licence from the Financial Markets Authority, PledgeMe expects debt crowdfunding campaigns to go live by mid-2016.
Peer-to-peer lending accounted for two-thirds of the international crowdfunding market, Guenther said.
‘‘We think it is going to be massive and it was a natural progression for us.’’
The new product will be called PledgeMe.Debt and will be similar to PledgeMe’s existing products PledgeMe.Projects and PledgeMe.Equity.