Drone firm sets $1.5m record for crowdfunding

A drone made by Aeronavics, which raised $1.5 million in capital using crowdfunding platform Snowball Effect.

Company exceeds initial target, setting new benchmark for capital-raising strategy.

Kiwi drone company Aeronavics has closed its crowdfunding offer at $1.5 million in capital using crowdfunding platform Snowball Effect, setting a new benchmark for such campaigns in New Zealand.

Aeronavics was initially aiming to raise $750,000 but investor demand saw the company raise its target to a maximum of $1.5 million, which was reached on Tuesday. The capital will be used to help fund growth plans and develop a strong research and development pipeline.

Investors in the offer received an equity stake in the company, with shares selling for $1 per share, and minimum investment of $1000. A total of 213 investments were made.

Snowball Effect's head of company pipeline and services, Shaun Edlin, said market awareness was one of the biggest barriers to greater use of crowdfunding.

"[Successes like Aeronavics] help raise awareness of Snowball Effect and equity crowdfunding in general," Edlin said.

"For companies considering raising capital, success stories prove that it's possible to raise a significant amount of capital through our platform and benefit from the exposure that a successful offer brings."

The first equity crowdfunding market was developed in Britain in 2011. Initially, the idea was slow to take off amongst angel investors and venture capital firms, but Edlin said the crowdfunding trend was growing.

The British crowdfunding market had experienced an average annual growth rate of 410 per cent since it was launched, Edlin said.

"Thirty per cent of seed investment in the UK was sourced through equity crowdfunding platforms in 2014 and that figure is estimated to be 50 per cent in 2015."

Shaun Edlin.

Aeronavics is the company's fourth crowdfunding offer after Renaissance Brewing ($700,000), The Patriarch ($488,800) and CarbonScape ($764,302).

Edlin said crowdfunding in New Zealand was gaining traction, as understanding and the investor side of the market developed.

"It's still early days for equity crowdfunding in New Zealand," Edlin said. "New Zealand has world-leading regulations for equity crowdfunding, although a few countries [such as Britain] still have the jump on us by a couple of years as a result of having an equity crowdfunding market in operation for longer," he said. "Equity crowdfunding is growing in New Zealand faster than we expected."