8.7% Crowdfunding sector to boom
THERE’S AN old saying that two’s company and three’s a crowd, but that’s not stopping a new Australian equity crowdfunding platform wanting to join the party.
Equitise is preparing to launch in New Zealand, following in the footsteps of Pledge Me and Snowball Effect, which were the first two crowdfunding services licensed by the Financial Markets Authority to let businesses sell shares to the public through their websites.
Equitise is about to apply to the FMA to do the same, and cofounder Chris Gilbert said he thinks between five and 10 such platforms could be operating here by next year, although there won’t be room for that many.
‘‘At that stage some will work out there’s no margin in it and there will be consolidation,’’ he said.
Snowball Effect launched the country’s first equity crowdfunding campaign last week with Blenheim’s Renaissance Brewing aiming to raise $700,000 by offering just over 12 per cent of the company to investors (see Your Portfolio, P11).
Josh Daniell, Snowball’s platform head, said the New Zealand market wasn’t big enough to support a large number of platforms.
‘‘We certainly expect others to look at entering the market and that there will be a shake-out at some point. Platforms which focus on quality, both in the companies coming through and the types of investors coming to the platform, will be long term.’’
Daniell said he’d spoken to companies sniffing around the market that did not end up applying and that’s likely to have been because there was no ‘‘goldmine’’ to be made. ‘‘We don’t do it for the money. We do it because it’s awesome for New Zealand.’’
Gilbert said Equitise’s point of difference is that it will be trans-Tasman, bringing Australian companies over to Kiwi investors and vice versa. Gilbert, a former Deloitte analyst, and his business partner, former Citigroup staffer Jonny Wilkinson, had intended launching their platform across the Tasman first, but changed their minds once New Zealand beat Australia to the punch in legalising it in April.
Pledge Me, which has helped 650 New Zealanders raise a total of $2.5m for various projects over the past two years, has not yet taken a business through equity crowdfunding. Anna Guenther, chief executive – or as she likes to call herself, chief bubble blower – said that although there was a strong need for more capital for Kiwi startups and growth companies, New Zealand was not a huge market.
She said it would be interesting to hear how many people the Australia-based Equitise planned to have in-market to help companies through the crowdfunding and then afterwards support them deal with a potentially large number of shareholders.
Like Snowball Effect, Pledge Me has no plans at this stage to expand outside New Zealand.
The Australian Federal Government is expected to announce its official position on equity crowdfunding and employee share schemes next month.
Gilbert said they hoped to be operating in Australia within two months of that. Equitise has already begun accepting registrants – both investors and entrepreneurs – in anticipation of the government lowering the barrier for investment. They have two Australian companies in the midst of capital-raising lined up as their potential launchpad into the New Zealand market.
Listed investment firm Australasian Wealth Investments has taken a 10 per cent stake in Equitise for $100,000.