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AlphaCrowd raises $800,000 from Chinese investor, pending visa approval

Friday 4th November 2016

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Crowdfunding platform AlphaCrowd has raised $800,000 from a Chinese investor, which it plans to spend on taking on more staff, although more than half of that is subject to its newest shareholder being granted a work visa. 

The Auckland-based company got a $380,000 cash injection from Beijing-based Fang Liu and is expecting a further $420,000, which is contingent on Liu being granted a work visa from Immigration New Zealand, AlphaCrowd's financial statements show. The capital injections in July and September were needed to rectify two breaches of the company's net tangible asset requirements set out in its licensing conditions, which the Financial Markets Authority accepted. 

The company's directors and auditor BDO both note that a material uncertainty exists over the crowdfunding platform's ability to continue as a going concern without the final tranche of equity, which is subject to conditions outside AlphaCrowd's control. 

Liu's application for a work visa comes as the government restricts access for new residents with tougher criteria for the skilled migrant category. Equity investment typically qualifies for an investor category visa, though there's a minimum investment of $1.5 million needed in New Zealand for four years and a requirement to show settlement funds or assets of $1 million. 

So far Liu has built up a 14 percent stake from the first two installments, valuing AlphaCrowd at about $2.7 million. 

The crowdfunding platform completed its first full year of operation in the 12 months ended June 30, a period which covered its first offer - CityInsidr - which failed to reach the minimum funding target. 

AlphaCrowd didn't generate any revenue in the period while incurring costs of $171,000, of which $89,000 were directors fees. The company was set up with $120,000 of share capital, and was left in negative equity at the June 30 balance date. 

In an emailed statement, founding director Bart Janowski, who's based in Shanghai, said the new investment has been earmarked for skilled jobs in New Zealand, with AlphaCrowd planning to hire new staff next year. 

"Our focus is on sustainable growth and on the maintenance of robust operational processes and procedures to ensure best practice in regulatory compliance, corporate governance and service delivery," Janowski said.

Since the June 30 balance date, AlphaCrowd has launched three more offers - Korean real estate listings aggregator Venn Korea, consumer products maker Module, and on-demand delivery service LazyAz - of which two were successful. 

"We are very pleased with progress so far and the issuers that we have brought to market," Janowski said. "We have been rather selective in terms of the opportunities we have presented to investors and are stoked that we have had our first successful offers."

AlphaCrowd earns interest on investor funds held during the offer periods and charges issuers up to 6 percent of funds raised. With LazyAz raising almost $230,000 from the crowd and Module $207,000, that implies AlphaCrowd earned up to $26,200 from those offers. 

That compares to a minimum charge of $5,000 for issuers by Snowball Effect, the first and biggest of the licensed crowdfunding platforms, which charges a 7.5 percent success fee with a minimum of $20,000. Equitise charges issuers a 7.5 percent success fee, while Pledge Me charges a $1,500 establishment fee and 5 percent success fee.

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