What is equity crowdfunding?

Learn a bit more about what equity crowdfunding is, and how it could work for you.

Equity crowdfunding helps Kiwis fund the companies they care about. Our PledgeMe.Equity platform helps businesses harness the power of their crowd to raise capital without the need for a full prospectus. How equity crowdfunding works is a company (like yours!) exchanges shares for investment. This means your crowd becomes shareholders and ambassadors for your company. Companies can raise up to $2 million in a 12 month period through a licensed platform (like us). The Financial Markets Conduct Act 2014 regulates this new type of capital raising.

If you’re looking to invest in a company who is crowdfunding with PledgeMe check out our Investor Education Guide here.

Is Equity Crowdfunding for you?

Equity crowdfunding is for entrepreneurs, business folk, small to medium enterprises or any business looking to raise capital (usually) in the early stages of their business. Traditionally, capital came from bank loans, angel investment, help from friends and family, or by dipping into your own savings. Equity crowdfunding is a new capital raising tool that’s more engaging and transparent. It can help Kiwis who have a great business plan, some traction, and excellent people, but can’t start up or grow due to a lack of finance. If you’ve got a crowd and a solid plan to take your business to the next level then equity crowdfunding might be for you.

💰 Fees

Success fee = 7.5% zero rated of total raised if your goal is met by the deadline.

Credit card fee (charged to your pledger) = 2.5% + 25c (if they choose to pay by credit card).

CrowdfundingU Online Course = $4,000 + GST for those seeking to raise (fees effective 1 December 2020). This fee can be subsidised up to 50% for eligible New Zealand businesses. Learn more on our CrowdfundingU page.

How does it work?

1. The first thing you do before getting started is to make contact with the real people at PledgeMe (1-2 days).

2. After chatting with us you then register for CrowdfundingU which puts you on the path to launching your campaign as well as allows us to provide help and feedback on your video, pitch, business plan, financial forecasts and other documentation — (10-12 weeks). Please note: If you are planning to apply for Management Capability Funding, this may take an additional 1-2 weeks.

3. Then you get ready to go out to your crowd and ask them to pledge investment. (varies depending on campaign length)

4. When you make your goal, all the verified people who pledged become shareholders in your company and you receive their investment dollars. It’s important to remember you have an ongoing responsibility to your shareholders under the Companies Act.

Private Campaigns

A private campaign is where companies have more control over who gets to see their offer. If you choose to do a private campaign you can go out to your crowd, and your crowd only, to secure investment. By just going out to your personal and professional networks and customers, you have a bit more control over who sees your information while still going through the PledgeMe process.

There are a couple of reasons why you might choose to do a private campaign.

You have a good understanding of who is going to invest and you know using PledgeMe, with its time limit and goal focus for raising funding, will make sure they invest. This is rather than chasing up multiple people over time and trying to nail them down. This works well for initial rounds for startups who are just going out to their family, friends, and immediate networks.
You’re not quite ready to show the world what you’ve been working on. It may be for cut-throat competitive reasons that you don’t want to shout about it yet, or it may just be that you’re the kind of person who likes to do things quietly.

Regardless of why you choose to run a private campaign, the build up to running it is pretty much the same as a normal campaign. It may even reduce your costs for running a campaign, because if you’re not seeking investment from your wider crowd you can spend less on creating a flashy business plan and PR work.

What does PledgeMe do?

PledgeMe is here to help. We’re pretty good at it too, PledgeMe has already helped tens of companies and hundreds of projects raise millions of dollars in New Zealand. Other than the basics of operating the platform and hosting campaigns, through CrowdfundingU we support you in planning, provide guidance on putting your showcase documents together, creating effective pitches, videos, and (almost) anything else you need to make your campaign awesome.

We are regulated by the Financial Markets Authority and we have a duty in our licence to understand your offer and understand your background. Businesses of all sizes can benefit from capital and we play a role in helping to present your opportunity both professionally and transparently to your potential investors.

There are some serious things that we will need to do, like background checks and wrapping our heads around your business plan and financials to make sure you’re not being inadvertently misleading. We cannot provide you with financial advice, but we can offer feedback on all the other things that will make your campaign a success.

Next ‘CrowdfundingU’ ➜

Successful Equity Crowdfunding Alumni