Equity Crowdfunding in New Zealand – How’s it going?

In September 2013, the Financial Markets Conduct Act 2013 was passed allowing companies to seek crowdfunding to raise capital. That is, use the “kickstarter” method, but giveaway equity instead of gifts/prizes/rewards etc. Since then, X companies have sprung up offering to a platform for equity crowdfunding. At first it was a bit of a rush through the door to find which types of companies suit crowdfunding. Understandably given this is New Zealand, beer crowdfunding seemed to be a massive hit but since then the market has slowed considerably and there has many “failures” by companies to raise capital. I thought a better way to look at how it’s gone over the past couple of years was to use my extremely poor visual statistics skills and draw some pretty graphs.

The platforms I used to gather these stats were….

Snowball Effect
Pledgeme
Equitise
Crowdcube
Liftoff
My Angel Investment

Ready. Set. Here we go!

Failed/Success

The first thing to work out is given all the crowdfunding floating around, how much of it actually met the target. And furthermore, how much met the “cap”. So even though you may be looking to raise $100k, you may allow more investors to jump on up to $200k until you say OK no more. The actual breakdown ends up something like this :

Failed : 15
Hit Target : 20
Hit Cap : 9

Or in visual terms.

FundingOutcome

That’s surprisingly good. If you think that only 34% of companies looking for crowdfunding fail, that’s a remarkably high hit rate when compared to other funding avenues.

Platforms

A few things to look at next is how each platform performs, and which ones seem to be doing the most funding. It’s a hard one to gauge because just from personal experience, sites like Snowball Effect while they may raise plenty of capital, they tend to be more “high end” companies that really could get funding from regular avenues, but have chosen crowdfunding. Pledgeme tends to have more early stage companies, with a few not-so great ones thrown in. We can see this when we look at offer caps of successful companies only (We do this because if someone goes and puts a ridiculous offer cap on a company then it can’t be helped by the platform).

AverageCapValue

In terms of total opportunities available, Pledgeme leads the way with 20 with Snowball Effect close behind.

TotalOpportunities

Or if piecharts are more your thing

TotalOpportunitiesMS

However when we look at the success rate of companies then PledgeMe falls a small way behind.

SuccessPercentage

Crowdcube looks to be number 1, but it’s only had 2 opportunities in it’s lifetime so far (Both successful). Equitise has had a few more at 6 with 4 of them successful. With those sorts of numbers it’s quite hard to gauge where you should go if you are looking to raise capital because there is so little data out there. But it’s all we have for now.

Cap vs Success

One final thing I wanted to take a look at is what sort of success different size companies are seeing with Crowdfunding. That is, when put into buckets based on their funding cap they are looking to raise, how many are successful and how many fall flat. Is there anything we can take away from companies that are maybe asking for too much?

CapVsSuccess

Chart is a little hard to read, but essentially it lumps companies together based on their cap they put up for funding. 0 – 500k, 500k – 1million etc. And realistically it doesn’t seem to make that much of a difference. We definitely get a good hit rate around that 500k to 1 million mark, but other than that we don’t see large scale fails quite yet.

Equity Crowdfunding in New Zealand – How’s it going?