Tuesday 18th November 2014
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PledgeMe, the equity crowd funder, is using its own platform to raise as much as $100,000 to grow its staff and build a mobile friendly website.
The offer, which values the Wellington based company at $600,000, is selling up to 14.3 percent of the company and is hoping to lure investors offering shares at $20 a piece with a minimum $500 investment, with a long term view to pay dividends once the board decides it’s prudent.
Launched late last night, the offer has raised $28,060 from 18 investors, more than half its minimum $50,000 target needed to lock in funds.
If successful, the company will use the proceeds to hire more staff, so it can boost the number of crowd funding offers it runs, and build a mobile optimised website. PledgeMe is an all or nothing crowd funder, meaning those looking to raise capital from investors must raise a minimum target to secure the pledged cash.
Earlier this year it was licensed by the Financial Markets Authority to allow companies to offer equity to the crowd when raising cash, in a shift away from project based offers.
So far, the company's first two equity offers, which both launched on Sept. 26, have failed to lock in their minimum targets. H2Explore, a hovercraft ferry business in the South Island, raised only $12,000 of its $250,000 minimum target before the offer closed on Friday.
Meanwhile, Techvana Operating, which is looking to raise a minimum of $250,000 and up to $750,000 to secure a location and build New Zealand’s first computer museum in Auckland, has so far raised $22,450 from 47 pledgers and has only nine days to raise the outstanding $227,550 needed to lock in funds.
"What we've seen is it's a lot slower getting companies ready than it is getting projects ready and there is a lot more work involved with that, but we're not concerned with the success rate is going to be lower," chief executive Anna Guenther told BusinessDesk. "What we've learnt is we really need to get companies thinking about their crowd and actually talking to their crowd, while it's something we definitely recommend we're going to be pushing it a lot harder in the future. It's something we did ourselves, we were talking to our crowd of supporters before we went live."
Since launching in 2012 PledgeMe has had a 49 percent success rate, with 675 successful projects raising more than $2.9 million. It clips the ticket on all successful offers, taking 5 percent of the total raised for both equity and project campaigns. In the long run it will look at paying dividends, once the board decides it's prudent.
According to the crowd funder's own crowd funding pitch, it expects to make a loss of $28,000 in the year ended March 31, 2015, on $128,000 in revenue. In the year it expects 800 crowd funding projects, which don't offer equity, of which half will be successful. It also projects half of its forecast 18 equity crowd funding offers will secure their minimum target.
In the following 2016 year, PledgeMe forecasts annual profit of $46,000 on $400,000 in sales, with 560 successful projects and 55 successful equity offers. In 2017 it forecast profit to rise to $226,000 on $966,000 in sales, with 850 successful projects and 166 successful equity offers.
PledgeMe is one of two equity crowd funders in New Zealand which are licensed under the new Financial Markets Conduct Act, providing a regime where projects can raise a maximum of $2 million offering equity through the online platforms. The licensing is part of the FMA's expanded brief to bolster New Zealand's capital markets but the new platforms do carry risks for investors, with reduced compliance obligations for small capital raisings compared to companies listed on the NZX mainboard.
Snowball Effect, the other equity crowd funder, has run three successful campaigns which have all secured their minimum target. The Auckland based crowd funder's current live offer, CarbonScape secured its minimum $400,000 over the weekend. The Christchurch based company is looking to raise up to $1.5 million through equity crowd funding platform offering shares at 20 cents apiece with a minimum investment of $1,000 and will use the proceeds to fund the commercialisation of its "green coke", an alternative to coking coal used in steel making.
Last month, 'The Patriarch', a new film to be directed by Lee Tamahori, secured $453,800 from 181 investors, offering non-voting shares at $1 apiece, coming in just shy of its maximum $500,000 target, after extending the offer's deadline.
In August, Blenheim boutique beer brewer, Renaissance, the first of Snowball's offers, wooed small investors to fill its order for $700,000 of new capital in just a week and a half, a quarter of the time the novel offer was open for punters to commit funds. Shares were offered with a $500 minimum investment at $2 apiece for 12.28 percent of the company.
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