Snowball Effect helps smaller growth companies expand
More small and medium sized companies are using crowdfunding services like Snowball Effect to raise money.
One of the latest is mail service provider and documents manager G3 which wants money to expand and acquire complementary companies.
Its has raised more than $200,000 after one week with nearly a month to go.
Chapman Tripp's Roger Wallis helped put together the G3 offer thanks to rule changes making it easier for small companies to raise money.
Snowball Effect claims a two thirds share of crowdfunding in New Zealand over the five or so different services.
Balex Marine will be next to seek Snowball Effect crowdfunding to market an automatic boat loader so users can "launch and retrieve their boat without getting feet wet, and faster than an electric winch".
Wallis said there was insufficient reward for traditional sharebrokers to manage capital raisings of less than $5m.
G3 is also listed on NXT - an alternative stock exchange set up for small growth companies a few months ago by the NZX, which operates the main board.
It is a foundation member along with Marlborough Wine Estates, Oceania Natural, and Snakk Media, which Wallis expects will also use crowdfunding.
"The big change in regulations for all companies is for same-class offers from an NXT or NZX company as long as they comply with regular financial and continuous disclosure."
Companies could seek money from any investor without writing and registering a prospectus each time.
Wallis said offers could be set up in three weeks instead of months.
Companies taking advantage of the changes recently included NZX-listed Synlait and Arvida with their latest rights issues.
For smaller companies, crowdfunding via Snowball Effect has assisted Powerhouse Ventures to raise $1.7m, in tandem with its A$10m-A$20m public fund raising as part of a proposed ASX listing.
The Powerhouse IPO for listing was extended by a week to close on September 23 to raise "as much as we can while we are in the market", according to managing director Dr Stephen Hampson.
He would not disclose whether the IPO had reached its minimum target of raising A$10 million but said the response to date had been "very good."
Others to successfully raise money from Snowball Effect recently include Punakaiki Fund ($462,000), Squirrel ($3.4m), and Invivo Wines ($2m).