Cheers all round: 1st equity crowdfunding campaign in New Zealand raises $700k
By Crowdfund Vibe staff writers
Renaissance Brewing Company has something to celebrate, apart from this weekend’s convincing win by the All Blacks over their fierce rugby rivals, the Australian Wallabies. On Saturday it successfully closed the first capital raising under New Zealand’s new equity crowdfunding laws after just 10 days.
The Marlborough craft brewery launched a campaign to raise NZD $600,000 on 13 August 2014, on the country’s new equity crowdfunding platform, Snowball Effect. Reflecting the strong interest in this new form of fundraising – and no doubt with the added attraction of some free product with its shares – Renaissance reached its initial goal on 21 August. The campaign closed yesterday when a total of 287 investors helped it achieve its funding cap of NZD $700,000.
— Snowball Effect (@snowballnz) August 23, 2014
Snowball Effect is a new platform in New Zealand that focuses upon growing small Kiwi businesses and offering opportunities to everyday Kiwi investors within their own country. It was one of the first applicants for the new crowdfunding service licences, and was granted its licence on 31 July 2014 . This successful first capital raise is an important milestone for the fledgling company, which was hatched in Auckland’s Icehouse business incubator.
New Zealand is one of the first countries in the world, and the first in the Asia-Pacific, to adopt a regulatory framework for equity crowdfunding. This were done through regulations made under the new Financial Markets Conduct Act that came into force on 1 April this year.
Writing on Snowball Effect’s blog – in a rather partisan move during a national election campaign – Minister of Commerce, Hon Craig Foss wrote “This is an exciting development for both start-up businesses and investors. …
“Companies can raise capital from the public on licensed crowdfunding platforms without the cost of preparing prospectuses and investment statements. …
“New Zealand’s rules are now in place and the first licences have been issued. The United States is yet to finalise its crowdfunding rules, while Australia’s Corporations and Markets Advisory Committee (CAMAC) has only recently issued recommendations in this area to government.
“Crowdfunding is an innovative way to match New Zealand ideas with New Zealand investors. Along with the other reforms in the FMC Act, it will make a material difference to the ability of our companies to raise the capital they need to grow and prosper.
Raising money for a brewery is comparatively easy though, as many people (& particularly men!) enjoy a good beer . On the other side of the world in the United States the first fundraising campaign under Michigan State’s new crowdfunding laws was also for a microbrewery. Manufacturing beer, alcohol or food is not particularly innovative and these products are easy to sell, even in a crowded marketplace. The business model for a niche brewery is straight-forward & readily understood by the average person. Crowdfunding’s real economic benefit comes from testing new innovations and concepts with the public and seeing whether there is demand for the company’s products and desire to invest in the enterprise to help it grow. This is where crowdfunding can support innovation and new growth.
The challenge for these new equity platforms will be when innovative Kiwi firms seek to raise capital, whose products and services are more complex and less readily understandable after a first read. Several of these types of capital raisings are in the pipeline on both newcomer Snowball Effect and Pledgeme, New Zealand’s established rewards platform that also has an equity fundraising licence. They will require different types of marketing to engage the crowd. Everyone will be watching the next campaigns with great interest.
At this point though, it is really pleasing to see that this first capital raising under the new laws was so successful. It’s time to raise a glass & say well done New Zealand!
Editor’s Note – We hope to have some analysis on the NZ regime in a future article.