Snowball Effect – the first 2 years!
New Zealand’s first equity crowdfunding offer kicked off on 11 August 2014. Below we’ve compiled an infographic showing some of the key statistics from the first 2 years of offers through Snowball Effect.
The NZ market started with public offers to retail investors through the new equity crowdfunding regulations. Over the last 2 years, the capital raising options have quickly evolved to include:
• Public offers: An offer which is available to all Kiwi investors, and publicly visible.
• Private offers: An offer which is restricted to an audience selected by the issuing company, and not publicly visible. The company can still make the offer to retail investors without a costly “product disclosure statement”.
• Wholesale investor offers: An offer which is available only to people who meet the “wholesale investor” criteria. Wholesale investors are investors that are legally able to invest in any type of security on offer. This is an important aspect to our offering as it enables us to facilitate a wider range of deals (such as offers of instruments like convertible notes, raises of more than $2m, and private brokering).
• Rights issues: Online facilitation of rights issues, including taking care of electronic signing of legal documents, payment collection, verification of wholesale investors, and anti-money laundering obligations.
We’re really happy with how the market has developed over the first 2 years. New territory is being broken again right now. G3 Group was the first company to list on NZX’s new junior exchange, the NXT Market, when it launched 15 months ago. G3 is now raising up to $3m through Snowball Effect. This is the first time that a listed company has used an “equity crowdfunding” marketplace to raise funds in New Zealand. We’re also starting to see more private broking of deals. The demand is coming from companies who are seeking capital but would prefer to keep the business tightly held – seeking a small number of large shareholders rather than a crowd of minnows. Snowball Effect has recently recruited former capital markets lawyer and entrepreneur Cowan Finch to lead this part of our offering.
There’s a long way to go before we make the impact that we want to make, but it’s been a great start.
Thank you to the entrepreneurs, investors, and partners who have helped to make the first 2 years of online capital raising in NZ a success. This is only the beginning – we’re excited about bringing a wider range of investment opportunities to investors, and continually improving access to finance for Kiwi companies.
The most pleasing result for us is the expansion of our offering as described above. This allows us to serve a broader part of the market, and tailor our services to meet the particular capital raising objectives of each client.
There has been 35% growth from the first year in terms of capital raised. There has also been a significant increase in the average size of investment, and the number of investors making multiple investments – metrics that we monitor closely as proxies for whether the right types of investors are being attracted to the marketplace.
We hope you find these numbers interesting, and feel free to contact me if there’s other information that you’d like to see – [email protected]