PledgeMe opens offer to crowdfund itself

Crowdfunding platform PledgeMe has launched an offer to crowdfund itself, despite none of the equity crowdfunding companies featured on its site reaching their targets.

PledgeMe aims to raise up to $100,000 by selling just under 15% of the company, offering 5,000 new shares. One share costs $20, with a minimum investment of $500. 

The company is forecasting a net loss of $28,000 in the 2015 financial year but expects to reach profitability the year after, with a $46,000 net profit. In the 2017 year it expects to make a $226,000 profit.

It expects to lose $1000 in earnings before interest, taxes, depreciation and amortisation in the 2015 year but have an ebitda of $103,000 the year after.

In July, PledgeMe and Snowball Effect were the first equity crowd funders in New Zealand to receive a licence from the Financial Markets Authority to act as intermediaries between investors and companies offering shares.

Since then, PledgeMe has run two equity campaigns on its site; one did not reach its target and the other also does not seem a hit with investors.

H2Explore – which wanted funding to provide a hovercraft transport service on Lake Pukaki – raised $12,000 from 11 investors, falling far short of its $250,000 target.

Techvana, which wants to create New Zealand’s first dedicated computer museum, has raised $22,450 from 47 investors out of a $250,000 minimum, with nine days to go.

PledgeMe chief executive Anna Guenther says she is not concerned there has not been a successful equity project before PledgeMe itself took a crack.

While PledgeMe “supports and amplifies” a campaign, it does not take responsibility for a company’s failure, she says.

“No, the entire message we’re sending is that everyone can have a go, we’re not going to say what is a good campaign or not. We tell our companies to test their ideas before they go out to their crowds. There’s a lot of reasons why companies aren’t successful in raising funds."

PledgeMe always planned to crowdfund itself, and pushed for the correct regulations by the Financial Markets Authority to make sure no conflicts of interest would happen, Ms Guenther says.

She is not entertaining the idea the company will not reach its target this time around.

“We’re very confident and I don’t think failure is an option. We’ve got a great crowd around us and great shareholders already. We’re really excited about this.”

The offer has been ‘soft launched’ to its employees and shareholders, so has already raised $28,000 from 18 investors out of its $50,000 minimum. The offer closes on November 30.

While none of the equity crowdfunding campaigns have so far been successful, the other side of PledgeMe’S business is running campaigns to crowdfund projects, raising just under $3 million in two years.

The company makes its money through a 5% success fee, background checks and running shareholder communication pages for its equity crowdfunders.

PledgeMe will pay a dividend when the board thinks it prudent to do so, Ms Guenther says. The board will consider crowdfunding more of the company in future, and will also look at an NZX or NXT listing, or a trade sale, she says.

Companies on equity crowdfunding platforms – which require less disclosure than those listed on the NZX – are limited to raising no more than $2 million from the public in any 12-month period.

The Financial Markets Authority warns potential investors to do their homework, as these companies will be at a much earlier stage in their existence than listed companies, so their financial track record and business prospects will be less clear.