PledgeMe celebrates equity crowdfunding being legalised in NZ
At 12:00 AM on Tuesday, 1st of April 2014, exhausted accountants and worried business owners were asleep dreaming of the new financial year being in place when they awoke. But one thing many of us did not know is that at 12:00 AM on the 1st of April, it also became legal to crowdsource equity for businesses.
This means that entrepreneurs, startup founders, and business owners with great ideas have another way to raise capital other than taking on a loan or seeking out investor dollars. They can now look to the crowd to raise their capital, and those backers can now hold a piece of the business. PledgeMe, New Zealand’s own crowdfunding site, has been eagerly awaiting this change and is rapidly moving towards getting their platform legalised so that they can accept equity campaigns.
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“We’ve been watching what’s happening overseas for a few years, and equity crowdfunding came into the FMCA picture last year,” Anna Guenther, co-founder of Kiwi crowdfunding platform PledgeMe exuberantly told us.
“The legislation means that if you own a company you can offer equity in return for pledges. Previously, you needed a public prospectus to do an online offering – which was a pretty expensive process to go through.
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“Equity crowdfunding will lower the barriers for seeking investment, and widen your pool of potential investors.”
This exciting change in legislation is set to completely revolutionise the startup scene in New Zealand, as an idea that might not particularly appeal to investors may well hold the attention of a large portion of the rest of our country.
Anna hopes the change will create a cleaner, more transparent, and more inclusive way to raise funds, both when you’re starting up through your network of family, friends and acquaintances, and when you’re growing through your network and customers.
“We’re pretty well primed! We have a team, we know how crowdfunding works having raised over $2.5 million [NZD], we have a tested platform – we just need to go through the licensing process with the FMA to be able to offer the service,” she said.
PledgeMe is currently working closely with the FMA to apply for a license that will legally allow others to use their platform to gather equity through the power of the cloud, although Anna notes it could take a few weeks to “cross the ‘t’s’ and dot the ‘i’s.'”
Entrepreneurs, innovators, and creative individuals looking to crowdsource their next round of equity raising need to have as much of the below in check before they can begin receiving capital contributions through PledgeMe.
- Your company name (as in the Companies Office) – they’ll have to check you’re registered with the office.
- Team details (Directors and Senior Managers) – they’ll need to do a basic background check on your senior team.
- Basic information around idea, market, exit plan / treatment of dividends – this is as much for your crowd as it is for PledgeMe! Make it interesting and accurate.
- Financial accounts created by an accountant (up to past three years, dependent on how long the company has been trading) – you will get bonus points if they’re audited.
- Financial forecast for the next three years – ensuring money raised is included (so you can show what the investment will mean for your business).
- Images from business / team in description / browse box – you can add these in your request, or as you go, but the more images the better.
- Business plan – this will be a PDF on your page.
- Valuation of the company – you can explain how you got to the number.
- Equity on offer (min target, and max overfund).
- Location – where you’re based.
- Sector – the sector you’re in.
- PledgeMe also recommends a video pitch, and maybe some rewards as well!
If you’ve got that in order, head on over to pledgeme.co.nz and get your project going!Tags: Anna Guenther, Crowdfunding, Equity, PledgeMe