Please first Register or Login then complete the Expression of Interest form.
The maximum that can be raised via equity crowdfunding in New Zealand in any 12 month period is $2.0 million.
The minimum that must be raised via the AlphaCrowd platform to constitute a successful Offer depends on the stage that the business is in and the detail of the specific Offer. Our minimums are $50,000 at Seed stage, $200,000 at the Start-up stage and $500,000 at the Expansion or Growth stage.
If you are a new business seeking to raise $2.0 million right off the bat then most likely we would design your capital raising in stages with each progressive stage tied to the accomplishment of milestones. This is the approach that professional investors might take in such a situation and is designed to manage the level of risk to investors.
On the other hand if you are an established business, or a business that legitimately requires high levels of capital then the $2.0 million raised via the AlphaCrowd platform can be one component of a larger capital raising strategy.
We have decided to focus exclusively on digital and technology companies for a number of reasons. First, this is what we are interested in and excited about. Technology is about growing the size of the pie and making the world a better place for everyone. Second, we believe that digital and technology businesses are easier to scale globally, need less capital and have better exit potential than traditional bricks and mortar businesses. In this regard you can read the work of Basil Peters or watch some of the university lectures he has delivered on this topic. Third, we have held many discussions with angel investors known to us and have found that they are predominantly interested in investing in digital and technology companies.
As an aside, we like the Requests for Startups issued by Y Combinator and believe that New Zealand investors also have an appetite for innovative Kiwi companies that are able to address these or similar topics in an innovative or technologically enabled way.
The answer to the question "Would AlphaCrowd list X type of business?" is possibly yes if the business displayed innovation or used technology in a way that gave it some competitive advantage or made it a possible acquisition target for a bigger business. Feel free to get in touch to see if we can work together.
Needless to say we only work with companies and issuers that operate within the law and satisfy our Due Diligence process. While we cannot guarantee outcomes for our Investors we certainly will do our best to mitigate the risks as much as possible.
There are no universally accepted definitions so here are our suggestions as to what may be suitable for equity crowdfunding in New Zealand via our AlphaCrowd platform.
|Stage||AlphaCrowd||Amount Raised||Equity Given||Explanation|
|Seed Capital||✓||$50,000 - $200,000||6% to 10% recommended||A modest amount provided to inventors or entrepreneurs to finance the early development of a new product or service. Pre-revenue and no established commercial operations. Further capital will be required if opportunity is found to be feasible.|
|Start-up Capital||✓||$200,000 - $500,000 or sometimes more||10% - 25% recommended||A more sizeable amount to enable the development of a concept into a commercial business. May or may not have revenue but has substantially developed business plan, team and usually a minimum viable product (MVP) or some service already being provided. Further capital may be required to fund growth.|
|Expansion or Growth Capital||✓||$500,000- $2,000,000||Valuation based||A typical angel-investment or early venture capital investment amount to fund the expansion or growth of an existing business that in most cases already has some revenue and a solidly developed business model.|
These are not hard and fast rules and we will consider each individual Offer on its merits.
For Seed stage companies the convention seems to be that around 6% to 10% of the business ends up in the hands of the earliest funders. There has to be an incentive for investors to take the risk of investing and there also has to be enough equity left to provide the founders with: their fair share, equity for further capital raising and equity for an employee share pool.
Once a business has intellectual property, a user base, revenues or some other way to demonstrate its value (lets call this "traction") then it becomes a matter of negotiation, bearing in mind once again that… there has to be an incentive for investors to take the risk of investing and there also has to be enough equity left to provide the founders with: their fair share, equity for further capital raising and equity for an employee share pool.
We charge the Issuer a fee of 6% of the total amount raised for successful Offers. There is no fee charged if the Offer does not succeed.
You may additionally incur your own costs related to the preparation or conduct of your Offer including but not limited to accounting, design, marketing, share registrar fees and professional advisor charges.
If you are "investment ready" then you may be able to complete all Offer preparation relatively quickly. The chances are that you may need a few weeks to a month of solid effort to prepare your Offer including becoming investment ready. We also need at least a week to do due diligence and once the Offer is approved by us we need to set-up the Offer on our platform.
If it is going to take you too long to prepare then either you are not yet ready or are simply too busy and could use the help of a Champion.
You first Register or Login then complete the Expression of Interest form under the Issuer tab. We will then do a quick evaluation after which we will contact you to request additional information, arrange a face-to-face meeting or politely decline. If everything is looking good, you will be asked to sign the Issuer Agreement between yourself and AlphaCrowd. We will then do our Preliminary Issuer Investigations which consist of Compulsory Checks and a Subjective Assessment. Assuming all goes well, we assist you with Offer preparation by letting you know what you need to provide e.g. your strategic growth plan, Offer Investment Memorandum, graphics, videos, etc. Once the Offer goes live on the platform we will keep in touch with you and support you to execute your Offer marketing strategy. Once the Offer is finished we will complete the Offer closing process (including trust account reconciliation), notify the share registrar and yourself of the investor details and transfer the settlement monies to your company’s account.
A number of studies in Australia and Canada have independently observed that many entrepreneurs seeking equity capital have been unsuccessful because they are not "investment ready." - Investing in Technology Ventures: What do Business Angels Look for at the Initial Screening Stage? by Harrison & Mason.
Government research in Australia in 1995 identified three central criteria of investment readiness, these are:
It is beyond the scope of our mission to work deeply with a potential Issuer to become investment ready however recognising that many entrepreneurs may benefit from investment readiness assistance we have appointed a number of external advisors that we call AlphaCrowd Champions to assist (at their own cost) the willing entrepreneur or potential Issuer in becoming investment ready.
New Zealand Trade and Enterprise have also produced a useful Investment Ready Guide.
An AlphaCrowd Champion is an independent, external advisor that understands the process of capital raising on the AlphaCrowd platform and can assist an entrepreneur or potential Issuer to become investment ready. Their services may include opportunity evaluation, governance advice, independent director services, development of a strategic growth plan, marketing plan or coaching.
It is not mandatory for a potential Issuer to make use of the services of an AlphaCrowd Champion or any other external advisor but in certain cases we may recommend that they do so.
The role of AlphaCrowd is that of a licensed intermediary which makes it legal for Issuers to offer shares to the public within the confines of the legislation. Being listed on the AlphaCrowd platform will provide you with exposure to investors interested in digital and technology businesses. However, the primary responsibility for the marketing of your Offer remains with you. We will advise you on ways that you can market your Offer and support you in what ways we can to execute your Offer marketing plan. Your AlphaCrowd Champion may also help if you require it.
All Issuers making an Offer through the AlphaCrowd website are required by us to engage a professional share registrar.
We have arranged for Computershare to act as the default share registrars for Issuers raising capital through AlphaCrowd. There is a fee for their services which is payable by your company to them directly. The share registrar will keep the official record of who your shareholders are, what their addresses are and can assist you in communications with your shareholders.
It is your responsibility to communicate with shareholders for the purposes of sending them an annual report on the business together with financial statements and any other information that you may be required to send them. You may wish to consult with your accountants and lawyers to make sure that you are meeting your ongoing obligations to your shareholders. As you may need further capital investment down the line, it is in your own best interests to keep your shareholders informed and engaged.
If you have a complaint or query about the services provided by AlphaCrowd, you should Contact Us first.
If you are not satisfied with our response, you may refer the complaint to Financial Services Complaints Limited, an approved dispute resolution scheme under the Financial Service Providers (Registration and Dispute Resolution) Act 2008. They can be contacted at: PO Box 5967, Wellington 6145 or complaints@@fscl.org.nz or 0800 347 257.