Crowdcube's first equity crowdfunding offer closes

Armillary Private Capital-run equity crowdfunding platform Crowdcube has closed its first offer today, for a loyalty scheme software provider.

The equity crowdfunding campaign for software start-up Collect reached its $200,000 minimum for 2.44% equity within three days of going live, with the offer left open for a further five weeks in the hope of reaching $1 million.

The offer ended up raising $470,700 from 39 investors, for a 5.56% equity stake with full voting rights.

The money raised will fund Collect’s international expansion and primarily establish a sales and distribution base in the US, where 30% of its customers are. 

The Wellington-based company made a loss last year of $796,119 on revenue of $163,688. It values itself at $8 million and has secured more than $2 million of investment in the past two years.

The company, founded in February last year, has 800 users in 60 countries for its cloud-based loyalty and marketing software. It consolidates customer, product and transactional data, then provides a suite of apps, including loyalty reward schemes, designed to help small businesses become effective marketers.

Collect founder and chief executive Brent Spicer expects 2000 paying customers within 12 months, with a breakeven point of 5100 customers.

The management team and board includes Peter Biggs, chairman of the Wellington Regional Economic Development Agency; ex-Xero executives Paula Jackson and Paul Williams; ex-Google executive Kyle Enright, who is based in San Francisco; and co-founders Matt and Brady Thomas.

The company has 14 staff now, including one in the US. Mr Spicer says its plans to have 31 in a year’s time, with five or six based in North America.

It plans to raise further capital from US institutional investors by the end of the year.

Investment bank Armillary decided to take a bite of the changing capital raising environment in New Zealand and launched Crowdcube here in June under a joint-venture model with an established UK platform of the same name.

Armillary managing director David Wallace told NBR there are synergies in tying investment banking and equity crowdfunding together, and it is something the New Zealand market needs to consider.

A recent Forbes study found crowdfunding and peer-to-peer lending would surpass the US venture capital industry in 2016.

“The finance community has to get its head around crowdfunding offers, in the perspective of either investing or arranging transactions.

“I wonder whether the broking community has started to seriously think about crowdfunding type transactions and potential for their customers.”