Ben Nathan, founder and chief executive of Container Door. Photo / Supplied
Ben Nathan, founder and chief executive of Container Door. Photo / Supplied
Bulk goods online retailer Container Door is seeking to raise $2 million to repay its loans and grow its website product listings as it looks towards a "global exit".
The Auckland retail company which brands itself as "the Amazon of big things" has raised almost $720,000 in less thantwo days through 518 pledges in its latest equity crowding campaign on PledgeMe.
A total of 602,410 company shares are on offer at $3.32 per share with a minimum investment of $498 for 150 shares.
Container Door claims the $2m it hopes to raise represents 4.5 per cent of the company, worth $39 million, according to founder and chief executive Ben Nathan.
The direct factory-to-consumer e-commerce retailer has ear-marked about $300,000 of that capital to be used to repay short-term debt, Nathan told the Herald.
Financials in Container Door's "Information Memorandum" on PledgeMe say it lost $2.7m in its 2018 financial year and $3.2m this year. It forecasts losses of $2.3m in 2020 and $1m in 2021 before a $118,000 profit in 2022 (the projections are all contingent on the current bid for $2m in crowdfunded equity being successful).
Revenue rose from $5.1m in 2018 to $6.4m in 2019 and is forecast to jump to $8.7m in 2020, and $22.7m by 2022.
The memorandum says Container Door has no bank debt, but it says it has "related-party payables" of $1.5m plus a secured loan of $1.4m to a related party. And it notes the company intends to repay $300,000 related-party loan from capital raised.
The company has negative equity (-$4.9m), the memorandum says and it's forecast to remain negative through 2022.
Container Door raised $2m through crowdfunding last year, which it used to set up a showroom with pick-up areas, introduce Afterpay payment and expand its operations across the ditch. It is looking for a commercial partner in Australia to run business there.
"What we're doing is building out our platform so it can handle growth," said Nathan said, adding that the company had global aspirations, and wanted to follow internet giant Amazon's lead.
Nathan, who has worked in retail in New Zealand for 25 years and formerly owned men's wear retail chain Barkers Clothing, said Container Door was looking for a global partner to take the business to the next level, through either part or full ownership.
"We definitely have a path to profit but that doesn't mean we won't be acquired before it makes a profit. That's what we're looking for, we're looking for a global exit."
Lance Wiggs, founder of Punakaiki Fund, said a company like Container Door should in theory be profitable and cash flow positive from inception.
The company's valuation seemed unusually high, and appeared to follow a trend whereby some companies crowdfunding tended to overstate their worth, and much higher than those in the private market, Wiggs said.
Container Door sells furniture and water sports equipment in container loads. Photo / Screenshot
He said he struggled to understand why the company was yet to make a profit.
"How can you have a business like this that doesn't make money?
"Typically I would expect a deal company like this to make money from the get-go. The gross profit does appear to be a lot lower than I would expect and I worry about the expenses, and how much marketing is buried in the expenses, as well as staff costs."
Wiggs said he was "highly suspicious" of deal sites that needed to raise money to grow.
Retail offers generally tended to attract higher valuations, sometimes double those of the private sector, he said.
Cactus Outdoor director and tech investor Ben Kepes said equity crowdfunding often came with significant risk to everyday investors.
"It can be a positive thing but often with crowdfunding you have people who aren't sophisticated investors putting money into things which are highly speculative. While crowdfunding platforms are really keen on talking about democratisation and allowing the average investor a chance to get in on opportunities, they also introduce a heap of risk.
"If a proposition can't get investment through normal channels then there's a good reason for that, and I don't think equity crowdfunding is the answer."
