Firms line up for crowd funding enterprise

Photo / Thinkstock

One of the first companies hoping to offer equity crowd funding says it already has 11 firms lined up wanting to raise money this year.

Snowball Effect has yet to gain a licence from the Financial Markets Authority, but said more than 100 firms had already expressed interest in raising money from the public.

Equity crowd funding was only made possible through a law change on April 1 and platforms are still in the licensing process.

Snowball Effect director Richard Allen said he could not name any of the companies wanting to raise money because his firm had yet to get a licence and any promotion could be seen as part of an offer.

But the type of companies included retail clothing, entertainment, cloud-based software, food and beverage retail and food services.

"It's not just tech start-ups."

Two of the businesses it had lined up were start-ups while the other nine were established. Allen said the companies had been sourced from a network of accounting and law firms Snowball worked with.

Companies could raise up to $2 million a year but most would raise less. "There are lots of companies that need $1 million [to] $2 million."

But Snowball was advising them to break it into two to three stages because the process was new.

Allen said Snowball hoped to have the first companies open for investment by mid-May. Companies have 60 days to raise the money.

Snowball was now in the process of registering investors.

Equity crowd funding

• Companies raise cash in exchange for shares through an online platform.
• Online platforms have to be licensed by the Financial Markets Authority.
• Companies are limited to raising $2 million a year.