New capital raising options

  • Written by Snowball Effect
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The team at Snowball Effect is on a mission to make capital raising simpler and more efficient.

Our offering has evolved to include public offers, private offers, wholesale investor offers, and bespoke capital raising assistance. This article provides a brief summary of these options.

Each option benefits from the efficiency of an online process, and includes the following administrative functions:

  • Compliance with anti-money laundering obligations.
  • Electronic signing of legal documents by investors.
  • Collection of payments.
  • Validation of wholesale investors (if necessary).

Public offers

Each company can raise up to $2 million in any 12 month period by offering shares to the New Zealand public through a licensed marketplace like Snowball Effect. There is no requirement for a regulated offer document such as a "product disclosure statement". This enables companies to raise funds from a large pool of potential investors at low cost.

The key advantages of a public offer are:

  • Money: Access to a large investor pool.
  • Efficiency: Raise funds quickly. Grow your business instead of wasting valuable management time on raising capital.
  • Marketing: Broad media exposure and shareholder advocates.

You can raise more than $2m, but the balance needs to come from "wholesale investors" rather than "retail investors".

Private offers

A private offer allows you to restrict access to a defined audience. You can still make the offer to retail investors without a regulated product disclosure statement. You simply send the offer page link to your defined audience, and investors use our normal process. The offer page can be password protected (if you wish), and the offer is invisible to everyone who has not received the link.

Private offers can also be used to facilitate rights issues, share purchase plans, and secondary capital raisings by listed companies.

Wholesale investor offers

"Wholesale investors" are investors that are legally able to invest in any type of security on offer. Snowball Effect has the largest verified network of wholesale investors in New Zealand who have a demonstrated interest in investing in private growth companies.

You may decide to restrict your offer to wholesale investors for a number of reasons. For example, you may prefer to structure your offer in a way which is not permitted by the equity crowdfunding regulations (such as offering a convertible note), or you may prefer to focus on larger investors.

Snowball Effect's wholesale investor network can also be leveraged to "top up" offers that are already being made exclusively to wholesale investors.

Bespoke capital raising assistance

You may want help with preparing a teaser, preparing an information memorandum, or seeking a cornerstone investor. We provide bespoke capital raising assistance if we think that we can add value.

Other options to be aware of

  • Nominee company: Investors can hold shares directly in the operating company, or in a nominee company which holds shares in the operating company. Some companies prefer a nominee company if they want a single new investor on their share register.
  • Secondary market: We have designed a secondary market specifically for private growth companies. You release a "trading report" which is immediately followed by a maximum 4 week trading period. These trading periods can be facilitated one or more times per year for each company. Short trading windows are useful to concentrate buyers and sellers into the market at a point in time to maximize liquidity. And it means far less hassle for you as there is no continuous disclosure. Based on feedback from Snowball investors, if you make a commitment to use our secondary market in your offer, the offer will have a better chance of success.

About Snowball Effect

Snowball Effect is New Zealand's leading equity crowdfunding marketplace. We launched New Zealand's first equity crowdfunding offer in August 2014, and we've raised more funds than all other New Zealand equity crowdfunding marketplaces combined (over 70% market share at time of writing).

Our key value proposition is offering companies the best chance of successfully raising funds. We do that in the following ways:

  • Support: Quality offer materials are critical to capital raising success. We provide support while you develop your offer and offer marketing plan.
  • Investors: We put a lot of effort into building a quality audience of potential investors, and our investor members are people who are here for the purpose of investing in high growth Kiwi businesses.
  • Credibility: Snowball Effect is seen as the market leader in New Zealand. Offers on Snowball Effect are more likely to attract the attention of experienced investors.
  • Process: We have designed the lowest cost and most efficient process possible for both investors and companies. This enables us to provide excellent value for our fee, and ensures a fast and simple capital raising process.
  • Judgment: We understand equity crowdfunding and online capital raising better than anyone in New Zealand. If we think that our capital raising options aren't right for you, we'll tell you at the earliest opportunity so that nobody is wasting time and you aren't risking your brand and reputation on an offer with little chance of success.

We have a track record of raising capital for a wide variety of companies, and we pride ourselves on our high success rate to date. We look to work with standout companies because we want Snowball Effect to be known for quality deal flow.

Final words

We look forward to exploring the options to help you to raise funds and grow your business. Please contact Shaun Edlin on [email protected] or 022 106 2757 to learn more.