Snowball Effect Review
For Business Owners
Snowball Effect is a New Zealand equity crowdfunding site
This independent review has been written for startups & growing companies considering using Snowball Effect to raise money with equity crowdfunding.
- What Is Equity Crowdfunding?
- Best Equity Crowdfunding Sites From Around The World
- How To Crowdfund A Business Through Equity Crowdfunding – Step-By-Step
In this Snowball Effect review, you will learn about:
- Snowball Effect’s Attitude To Curation
- Which Companies Can Use Snowball Effect
- How Snowball Effect Helps Business Owners
- What Is Unique / Different About Snowball Effect
- Advice – How To Raise Money With Snowball Effect
Platform Website: snowballeffect.co.nz
Snowball Effect Attitude To Curation:
Snowball Effect are being increasingly selective about the companies they work with. This means heavier upfront vetting at their end, before the companies get to “go live”. A representative of Snowball Effect estimated that only around 3% of companies who have an initial chat or fill in an application ultimately end up getting the chance to show their offer to the public.
Why are so many companies turned away? Rather than play a volume game with a vast array of companies listing on their platform, Snowball Effect are more about looking for companies with enough history under their belt that they have been sufficiently de-risked to their investor database. This approach leads to a higher success rate for those companies which *do* get hosted.
Snowball Effect don’t want companies to fail publicly with equity crowdfunding. As they say on their website: “If we think that our capital raising options aren’t right for you, we’ll tell you at the earliest opportunity so that nobody is wasting time and you aren’t risking your brand and reputation on an offer with little chance of success.”
Learn How To Succeed With Equity Crowdfunding
Equity crowdfunding offers amazing potential for startups and growing companies, but it is also a very steep learning curve.
In this step-by-step book, you will hear from the world’s leading platforms and from successful past crowdfunders from around the globe, with all their tips and tricks.
Learn how they did it, and how you can do the same.
Which Companies Can Use Snowball Effect:
Snowball Effect has hosted a fairly broad range of companies – doing everything from drones, to electric motorcycles, alcoholic beverages, fashion, software, and medical devices. With all that said, certain industries have been proven to get better cut-through than others. Companies with global scalability potential are particularly favorable on Snowball Effect – e.g. SaaS, or products with strong export potential.
The mission of Snowball Effect is to help fix the so-called “funding gap”. In particular, they see themselves occupying a space which is post-angel-investment, but pre-private-equity. This equates to a certain stage of company, and a certain type of investor with a certain risk appetite. Ideally, companies will be generating NZ$1 million in revenue or greater, which is a somewhat later-stage than true “startups”.
Snowball Effect is licensed by the New Zealand Financial Markets Authority as an equity crowdfunding provider. This means that companies can raise money under these rules without needing to produce a regulated offer document.
Companies need to understand that this platform has a predominantly New Zealand investor database. As a result, Snowball Effect is for New Zealand-domiciled companies. However, these companies may have operational assets overseas.
As for who is eligible to invest – Snowball Effect is open to all New Zealand citizens and permanent residents (provided they comply with Snowball Effect’s investor agreement). In recognition of the fact that online equity crowdfunding platforms get eyeballs from all over the world, Snowball Effect offers are open to international investors too, so long as the company raising funds allows it, and the investor does not breach any rules in their own home country. In this regard, the responsibility of determining investor eligibility is up to the investor.
Raise Size Restrictions:
Snowball Effect are realistically looking for capital raisings in the range of NZ$750,000 – NZ$5 million range. While New Zealand’s equity crowdfunding rules allow for retail offers of up to NZ$2 million, Snowball Effect are able to facilitate raising larger amounts than this, thanks to their network of wholesale investors who escape this NZ$2 million restriction. Companies may also elect to run a fully private offer on Snowball Effect, if they don’t want to take advantage of the equity crowdfunding rules (and capital-raise size restriction).
Take The Quiz – Are You Ready For Equity Crowdfunding?
Equity crowdfunding can raise 6 – 7 figures of investment for startups & growing companies, without banks or VC.
But is your company ready to launch?
This short multi-choice assessment has been created to give an indication of whether your company is fit for funding.
All answers are kept completely confidential.
How Snowball Effect Helps Business Owners:
Snowball Effect have developed deep relationships with professional service providers, for example in the tax and accounting space. These firms can help get candidate companies “fit for funding”.
They can also help with access to cornerstone investors. They are quite strict when it comes to companies needing to get external validation outside of Snowball Effect’s own viewpoint. They want industry insiders to come on board, do their own due diligence and invest their own money so that the crowd can follow along. Beyond the capital-raising advantages, these introductions can also lead to new directors coming on board. Snowball Effect works quite hard to understand the skills and capabilities of these key people, so they can make the right introductions to the right companies.
Once a company has been given the green light, Snowball Effect also helps with the public-facing parts of the equity crowdfunding campaign. The marketing person at the company raising funds can be in contact with a Snowball Effect representative for help with PR outreach, video production, engaging with newsletter subscribers, events, and overall campaign timeline management.
What Is Unique / Different About Snowball Effect?
Once an engagement with Snowball Effect has been secured, further assistance can come in the form of helping to prepare the presentation and investment documentation. Most companies do not have a lot of experience with equity crowdfunding – they are doing it for the very first time. Therefore, having someone with that knowledge to guide them can be very helpful.
Another difference with Snowball Effect is their level of ongoing services. e.g.
- Help with writing shareholder reports, to make sure they contain the right kind of information.
- Help with corporate actions such as shareholder resolutions – handled electronically with their online share register. This saves money on legal fees, because it used to be lawyers who were handling the shareholder register updates. Investors like it too, because they can easily login and see holdings, and any transfers.
Finally, Snowball Effect differentiate themselves through the depth and breadth of their investor network. They like to support less-sophisticated investors investing alongside the more-sophisticated investors who have deep industry knowledge. It gives the “crowd” the opportunity to improve their financial literacy, while unlocking additional pools of investor demand at the same time.
Advice – How To Raise Money Through Snowball Effect:
As mentioned earlier, Snowball Effect are more about helping companies with a proven business model raise expansion capital. They are not really an avenue for very new startups to get their seed funding. So, when you approach Snowball Effect for that initial conversation, you would be well-advised to show off your traction. What have you already been able to achieve, prior to equity crowdfunding?
Next, articulate your growth strategy. What will the funds you hope to raise be used for? It should not be used to repay debt or help shareholders to “cash out”. Instead, the new funding should be used for further growth – new product development, expanding to new markets. Show them how the money you raise will “add fuel to the fire.”
Finally, learn from the best crowdfunding case studies so that you can replicate their success. Absorb as much information as possible so that you are prepared to crowdfund!
You’ll learn how to choose the right platform, build a crowd, and raise game-changing money.
Join The Free Equity Crowdfunding Training
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