Another equity crowdfunding site launches with first offer

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Australian equity crowdfunding platform Equitise is up and running in New Zealand after receiving its licence from the Financial Markets Authority.

The platform, which aims to operate in Australia too once legislation is enacted, will provide competition to Snowball Effect and Pledgeme, which received the first equity crowdfunding licenses last July under the Financial Markets Conduct Act.

Equitise co-founder Chris Gilbert told NBR ONLINE last month Equitise will differ from the other two platforms in being more of a "social" capital raising platform in the mould of US site AngelList, with financial advisers, chat boards and business tips.

“We wanted a social equity capital platform; we’re here to help businesses that are two to three years out from raising capital. We’ve got Australian investors who want to invest in New Zealand companies from day one, so we’ve got a big investment base. We’re really looking to operate with scale very quickly,” he said.

Equitise – which charges up to 7.5% of the total capital raised, above the 6% charged by its rivals – received its licence on December 22 and its first offer has just hit the site.

Tourism Radio New Zealand (TRNZ) has a patented technology that gives location-based audio information on more than 2200 New Zealand locations to tourists using in-car-devices, mobile phones and tablets in motor homes and rental cars. Since it was founded in 2008, the business has grown to a base of 2500 in-car devices and 25 mobile apps, bringing in revenue of $951,500 last year.

The Rosedale-based business has already raised 22.5% of its $200,000 minimum target (200,000 newly issued shares and 17.4% of the company), with founder Hayden Braddock and angel investor and formerly ASX-listed Datasquirt founder Aaron Ridgway plugging in $45,000.

The company wants to raise a maximum $350,000 (350,000 newly issued shares and 26.9% of the company) and has 89 days left to drum up the support.

Funds raised will be used to expand TRNZ's local sales force and prepare the business for expansion into Australia. This will boost revenue growth by 50% year on year, management believes.

Its offer document recognises its market position needs to be defended, and it has exclusive partnership agreements with rental vehicle partners and has protected the technology with patents pending in New Zealand, Europe and the US. 

The company held $144,000 cash at the end of 2014, and is forecasting revenue of $1.42 million in the 2015 year and $2.14 million the year after. It forecasts earnings before interest, tax, depreciation and amortisation of $163,600 in the 2015 year and $395,200 the year after. Its net assets at the end of 2013 were negative $767,376, Company Office records show. 

Swiss-based Dioptas Holding AG owns 50% of the share capital of TRNZ. The other major shareholders are co-founder and chief executive Hayden Braddock (30%) and salesman Daryl de Lautour (20%).

TRNZ believes there is significant upside in an untapped market, as international and domestic tourists spent $23.8 billion in 2013, which is forecast to hit $41 billion by 2025. The tourism advertising market will follow this trend, so there is significant upside potential to grow.

Equitise will make sure companies are prefunded by 30% before they hit the platform, which neither Snowball or PledgeMe does.

“It’s really important that there is some momentum going before it comes on to the platform, because nobody like to be the first to open their cheque book,” Mr Gilbert said.

“We also require companies to have an advisory board. It’s hard to get through our processes but, once a company does, it’s much easier to raise capital once you’re on the platform.”

Equitise has the backing of listed investment fund Australiana Wealth Investments. Mr Gilbert used to work at Deloitte on mergers and acquisitions of technology, media and telecom companies, while co-founder Jonny Wilkinson worked as a Citigroup trader.

Equitise also plans to raise $1 million next week for cystic fibrosis-focused biotech firm, Breathe Easy. The company’s product Citramel is currently in patient trials and was developed by Professor Bob Elliott, co-founder of ASX-listed Living Cell Technology.

Under the crowdfunding legislation, companies are limited to raising no more than $2 million from the public in any 12-month period.

The FMA have three applications for crowd funding licences in progress at the moment, a spokesperson says.