Capital raising options

Raising funds through Snowball Effect

Photo credit: Renaissance Brewing

Types of offer on Snowball Effect

Not all businesses are well suited to online capital raising. Companies should understand the full range of capital raising options, and choose the option which adds the most value in addition to the cash. Our offering includes public offers, private offers, wholesale investor offers, and bespoke capital raising assistance. Below is a summary of these options.

Each option includes the following administrative functions:

  • Investor onboarding and compliance with anti-money laundering obligations.
  • Electronic signing of legal documents by investors.
  • Collection of payments.
  • Validation of wholesale investor status (if necessary).

Online offers allow you to set the terms of the offer, set the offer period, and know how much resource and time you need to commit to the capital raising process.

Companies report better conversion of investor interest through an online offer – the process is very simple for investors so the friction involved with investing is significantly reduced.

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:

  1. Money

    Access to a large investor pool.
  2. Efficiency

    Raise funds quickly. Grow your business instead of wasting valuable management time on raising capital.
  3. Marketing

    Broad media exposure and shareholder advocates. Companies typically report a significant increase in revenue in the periods during and following an online offer.

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 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 and share purchase plans.

It's possible to make a private offer and then switch to a public offer when you are ready. Companies often use this process to offer to their inner circle, “pre-registered” investors, or existing customers for a short period before the offer goes public.

A company has more control of an offer with a private offer. However this increased control needs to be weighed against the reduced brand exposure and smaller investor pool versus a public offer.

Wholesale 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 early stage 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

We provide a range of advisory services to help get your company investment ready. Our team will work actively with you throughout the capital raising process. You may want help with preparing a teaser, preparing an information memorandum, or seeking a strategic investor. We provide bespoke capital raising assistance only where we think that we can add value. Learn more about our offer preparation services

Final words

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.

We look forward to exploring the options to help you to raise funds and grow your business. Please contact our team to learn more.

Bill O'Boyle[email protected]

Simeon Burnett[email protected]

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