Released to the public early this morning, the Snowball Effect offering for the Punakaiki fund has blown past its minimal funding target.
At this time of writing – exactly ten minutes past 3pm - $646,845 has been offered for the entry so far. At a funding target of $200,000, that’s 323% investment; with an overfunding cap of $2million, it certainly seems plausible to hit if the rate of investment continues.
First option was made available to investors that had invested in the original public offering in 2013. Access was then opened for people who had pre-subscribed to the equity crowdfunding campaign.
Fund director Lance Wiggs says that the funding target was set just to get the initiative going, but the major focus is attempting to hit the $2million mark.
“The target is to raise as much money as we can,” Wiggs says. “The more money we have the more we can invest.”
The first offering, back in 2013, didn’t quite cut the mustard. Setting the original target at $20 million, the fund ultimately received, out of 368 subscriptions, a total of just over $3.33 million. That was well short of the $5 million minimum, much less hitting their original goals.
It wasn’t until April 2014, and then in the following November and December periods, that private funding came through and saw new investment of about $4.1 million into ten startup companies.
“It’s really hard to ask people for money when you don’t have a visible portfolio of assets,” Wiggs says.
“And it’s really hard to ask for money from people who don’t want to give it to you.”
That’s why, he says, they’ve taken a softer approach utilising a crowdfunding model. Wiggs says presenting the fund as an “it is what it is” type of thing and not bashing people to get equity is a better choice.
Wiggs says the core philosophy of the Punakaiki Fund is to grow a fund that invests in the sort of companies you can track, and that hasn’t changed regardless of where the money is coming from.
Predominantly focused on software-as-a-service (SaaS) technology companies, the fund is investing heavily into early stage startups as a long-term investor. It’s a business model that, according to Diversity Ltd founder and principal Ben Kepes, as “[righting] some of the wrongs in the NZ investment scene.”
“Traditionally, New Zealand investment hasn’t been founder friendly,” Kepes says.
“The [Punakaiki] fund gives companies fair valuations, appropriate advice, and an appropriate level of equity.”
Kepes believes the investment sector has treated startups to a bad deal at the initial level funding stage, which translated to an inability to grow startup businesses internationally.
Now, with the new fund, Kepes believes it will support the local ecosystem in a founder-friendly way, and rather importantly for investors, the chance to spread investment capital across multiple startups.
If the target cap of $2million is reached, investors in the Snowball campaign will have a 25.7% stake in the fund.
Minimum investment has been set at $1,450, and is set to end on 30 June at 9pm.