There are few things that excite me more than learning of an emerging technology that has the potential to change the way we live or our world around us. Be it nanoparticles with the ability to clean our water, the creation of new antibodies engineered to fight cancer or even a device that improves the way we interact with our television.
As I live within a nation of innovators, some of the most ground breaking technology I have seen has been devised right here in NZ. However, having spent the last few years involved with the commercialisation of technology, I have witnessed how the challenges of raising funds for tech companies can prevent a potentially world-changing concept from ever reaching the market. I believe that opening funding to a nation of tech-savvy investors will momentously improve the capital raising abilities of tech companies in NZ and, as a result, significantly speed up the rate of innovation. It is this potential that has drawn me to equity crowdfunding, and is why I have joined Snowball Effect.
Rewards based crowdfunding platforms, such as Kickstarter and Indiegogo, have already set the trend for improving tech funding. Harnessing the passion of the crowd, an abundance of ingenious ideas have transitioned in to successful and disruptive products, like the Pebble smartwatch or The Micro consumer 3D printer – each raising US$10 million and US$3.4 million, respectively. These are projects that the public understood could make their lives easier, but which may have struggled to gain funding through traditional, conservative means due to their slightly “out there” nature.
However, companies that produce technology with the power to induce change are also very likely to reap large financial rewards as they grow, and crowdfunders are wising up to the fact that they deserve to benefit financially from the technology they back. This was revealed following the Kickstarter campaign for Oculus Rift, the virtual reality headset set to change entertainment, education, medicine and just about everything else. The campaign raised nearly US$2.5 million through the crowd, but the company was acquired by Facebook shortly after the campaign finished for a staggering US$2 billion. This understandably left the early backers feeling short changed.
The emergence of equity crowdfunding solves this challenge in the reward-based system, allowing passionate backers amongst the public to own a piece of a company whose technology they believe will be successful, and to have a share in the wealth generated by this success.
It is not just the public who will benefit from equity crowdfunding though, the other winners will be the tech companies trekking the arduous terrain between the development of an innovative product and mass production/significant profit – the so called “Valley of Death” where lack of capital prevents many great inventions from achieving commercial success. Attaining both early and expansion stage financing can be make or break for tech companies and allowing Kiwis to make investments according to their interests and values will provide companies with access to capital essential for market entry in sectors where other options are limited.
Having previously worked in the cleantech space, I have seen first-hand how difficult funding can be to attain for phenomenal technology that is set to improve our environment. But with Kiwis tending to be an ecologically conscious group, I believe that the NZ public will be keen to support gainful cleantech companies make their impact on the ecosystem. Support for this kind of science has already been demonstrated overseas, where Kiwi company Varigate raised US$912K for their water-saving irrigation software through the Israeli equity crowdfunding site, OurCrowd.
There is no doubt that equity crowdfunding is going to shake things up in the world of investment, but it will also significantly advance the commercialisation path for tech companies. The future success of the NZ economy depends on the translation of our world class research into new businesses generating wealth for the nation. What thrills me most about equity crowdfunding is its potential to provide this translation. And if equity crowdfunding is utilised by Kiwis in this way (and I have no doubt it will), then it will be our country leading the rest of the world into a more efficient, sustainable and entertaining future.