“We were confident we were going to reach our goal. But we never thought it would be that quick,” she told Idealog. The campaign has nine more days to go.
One of the funders include Vend’s - a software company - founder Vaughan Rowsell whose name appeared as the last pledge on the list of PledgeMe’s website. Rowsell and his partners in the OMG Tech! Tech Rangers project had in October used the crowd to fund a day one-day workshop for kids to make zombies, build robots, learn to code and experiment with all things science.
The crowd is your friend
Guenther says Rowsell is a friend, and she knew she could count on him for support. “I was just really relieved he got in on time!”
One of the fund providers, is a person whom the folks at PledgeMe haven’t even met before, who pledged $40,000.
The fact that PledgeMe has gone to the crowd to raise $50,000, was something of a world first, according to Guenther. “We’re the first platform that provides both equity and project-based crowdfunding to equity crowdfund itself.”
Guenther says the crowd isn’t a place for easy money to fund quirky projects. Those who want to use it need to understand how to make it work.
“Everyone has his or her ‘crowd’. It's important to talk to your crowd, to know them. They will validate what you are doing, and come to know you.”
Successful businesses commit a lot of time to talking and getting to know their customers, Guenther says, and this is no different for PledgeMe.
Prior to the campaign’s launch, she was confident the crowd would be behind PledgeMe’s own fundraising campaign. “We took our own advice, we have been talking to our crowd, and there is a lot of interest,” she had told Idealog prior to the fund raising going live.
“Now that we’ve walked the talk and eaten our own dogfood (a term describing putting your product to test by making your self the testbed) by crowdfunding crowdfunding, we’re in a better position to help companies do their own equity rounds.
“It’s not just an academic thing of understanding the mechanics, we know how it feels to go through the process of dusting off our documentation, corralling our crowd, and hitting the (scary) submit button,” the company says on its blog.
PledgeMe had set out to raise at least $50,000 and a maximum of $100,000. It raised the maximum in just over 23 hours.
PledgeMe's happy office crowd
Success rate and others
The company sold 5,000 shares to the crowd, or just under 15% stake, to 50 new shareholders who have to pledge a minimum of $500 at $20 per share.
Since it started in 2012, PledgeMe has helped fund over 700 successful projects, raising over $2.9 million. It has had a 49% success rate, which is the company says is double that of creative grant applications in New Zealand.
Guenther did her Masters in Entrepreneurship through the University of Otago, on the subject of – crowdfunding. She had formerly worked at New Zealand Trade and Enterprise, as a project manager and worked on the Enterprise Development Grant aimed at providing grants to help fund companies seeking offshore markets.
She says the thesis really got her interested and excited about the prospects to help develop a similar mechanism.
She then went on to build the PledgeMe platform, with the help of a friend who wrote the programme for the engine – from scratch. In 2013, the company partnered with Rabid Technologies (which PledgeMe office bearer Josh Forde is a director of) to build upon what it had started.
Early this year, PledgeMe had a round of capital raising from private investors given the Financial Markets Authority hadn’t yet given the go-ahead for crowdfunding platforms to offer equity for funds.
Based on the lowest forecast, the company is expecting to report a loss of $6,375 in 2016, and a profit of $127,394 in 2017. A mid-level forecast puts net profit at $52,085 in 2016, and $314,887 in 2017. The highest forecast puts net profit at $26,000 in 2016 and $269,952 in 2017. In the 2015 financial year, no profit is expected.
During the 2013 financial year, PledgeMe created 483 projects, of which 167 were successful. In 2014, a total of 578 projects were created of which 304 were successful.
Anna Guenther and Josh Forde (the latter in charge of all things strategy) celebrate early success
Other equity projects and competitors
PledgeMe launched its first equity-based campaign in September 2014 and plans to pursue one to two per month through to March 2015. There are two equity projects underway, on PledgeMe – HeExplore Ltd which closed without reaching its target, and Techvana which has less than a week to go, reaching $51,300 (Friday Nov 21) so far out of $250,000 targetted.
Its forecast for the FY2015 is for 18 equity-based campaigns. It is assuming each equity-based fund raising to average around $100,000 (against an average of between $80,000 and $100,000 seen overseas).
PledgeMe has about 10 competing entities (including venture capitalists and the New Zealand stock exchange) seeking to help the crowd raise money for projects or business.
How does it make money?
The company makes money from a 5% success fee charged for every campaign (project or equity) that reaches its goal. There is also a background fee of $150 plus GST for checking equity-based campaigns. Other recurring income comes from charges for hosting shareholders’ page.
Guenther’s 52.6% share in PledgeMe will drop to 45.1% after the share sale, while Rabid Technologies Ltd’s share will drop to 14.3% from 16.7%. Rabid's two directors are Forde and Breccan McLeod-Lundy (also a director of PledgeMe).
The company will be using the money raised to, among others, hire a Chief of Equity, to help find businesses to use PledgeMe as a platform for equity-based funding.
PledgMe warns that equity crowdfunding is risky business.