Who is this guide for?
Why invest in private companies?
By investing in private companies, you are supporting entrepreneurship in New Zealand and contributing to economic growth.
Improving access to capital for private companies allows ‘little guys with big dreams’ to scale successful businesses. It also enables you to be a part of it – imagine if you had the chance to jump into TradeMe or Xero in the early capital-raising stages!
When you invest in a business on Equitise, you become part of a community. You’re not just funding the business, but are also supporting the people and the idea behind the campaign.Family and friends
By helping family and friends to raise capital, you are not only supporting them emotionally through the whole process, but are also contributing financially.
Why invest in private companies?
Investing connects you to people with a shared goal. You can participate in the success of something you are passionate and excited about.Leverage your expertise
If you have knowledge and experience in a particular industry, product or process, you can also provide professional advice to companies, and make valuable contributions to their success.Accessibility
Equitise makes it easy for investors to be part of previously inaccessible, high-growth private businesses. We also provide tools for you to receive regular updates about your investment.No fees
Investing with Equitise is free and has no hidden fees.
Investments in high growth private businesses can produce a greater annual return than investing in other asset classes. The returns of private investments are highly skewed, as many businesses fail and success is attributed to those few that succeed. A comprehensive study of angel investors by Wiltbank & Boeker (2007, ‘Returns to Angel Investors in Groups’) found that the internal rate of return on investment is 27% (using the average hold time of 3.5 years).Portfolio diversification
Globally, institutions are seeking exposure to alternative assets of between 10% and 25% of their total portfolios, depending on their specific risk
profiles,(private companies are one type of alternative asset). In the recent BlackRock report titled “the new diversification: Open your eyes to
alternatives” Dr Christopher Geczy, “would argue that the percentage for almost everyone should be larger than 10%.”
In order to achieve a higher return, it’s vital to diversify your portfolio of investments in private companies. It is recommended that you invest small amounts of money in multiple businesses, rather than putting all your capital towards one or two campaigns. Diversification is a strategy that allows you to generate a higher return from your investments and it’s also an effective way to minimise risk.
Equitise both enables and encourages company directors to easily contact investors after the capital raising has finished. We provide all the necessary tools to allow companies to do this simply and efficiently. Ultimately,
however, it’s the company director’s responsibility to contact investors and pay shareholders with dividends.
As an investor, you can access company announcements by email and online notifications. Your details are registered on the company’s share register when your investment is completed. You also have the ability to contact the business directly if you have any questions.
Managing risk is an important task when investing in private companies. Equity crowdfunding may not be for everyone. If you choose to invest through Equitise, it is vital that you familiarise yourself with the potential risks of investing in private companies.
Equitise does not provide investment advice regarding risk management. As an investor, it is your responsibility to carefully consider each investment choice. Make sure you read all the information, carry out your checks and conduct external research prior to committing yourself to an investment.
Ultimately, you should seek professional advice before making any investments, especially in an asset class you’ve not invested in before.
Investors should be extremely conscious of the amount of capital they invest. You should not invest more capital than you can afford to lose, or invest an amount that would put you in any financial hardship.Dilution
Any investment on the Equitise platform is subject to dilution, meaning the decline of your percentage ownership of the business. Dilution may occur if the business decides to raise additional capital in the future, issue new shares to investors, or grant options over shares to employees.Illiquidity
All investments on the Equitise platform are highly illiquid. Shares can only be sold if you can find a buyer or if another company buys the business, or if the business goes public by floating its shares on the stock exchange.Lack of information
Equity crowdfunding is less stringently regulated than other financial market transactions. For this reason, the information that is usually required for public company transactions may not be given to you.Infrequency of dividends
Dividends are rarely paid by early stage private businesses, as capital is usually reinvested to fund growth and expansion. If you invest in a business on Equitise, even if the business is successful, it is unlikely you will receive profits or a return until you are able to sell your shares in the business.Goals
Equitise cannot guarantee that a business will be successful in achieving their targets. As with all equity invesments, Equitise cannot guarantee any returns on your invesments.
We undertake preliminary checks in reviewing every business on our platform before campaigns go live. To reduce the risk of fraud and misconduct, and ensure your safety as an investor, we have adopted the following practices.Business due diligence
When a campaign is submitted via the Equitise platform, our experienced team carefully reviews the business information provided. We only allow a business to raise capital once the issuer has passed a series of standard internal checks to validate their information.
Equitise aims to only launch business campaigns that are fair and not misleading to investors. Having said this, we can only do so much. Ultimately it is up to the investor to conduct their own private due diligence before making their investment decision.
It is mandatory for company directors, advisors and board members to complete a 100-point identification verification process.
We use an online identification checking service (Cloudcheck) to comply with the New Zealand Anti-Money Laundering and Countering Financing of Terrorism Act 2009.
Equitise also conducts high-level criminal background checks for company directors, advisors and board members.
Disclaimer:Investors should do their own due diligence and take all such professional advice as may be necessary regarding their investment decisions. Equitise is not responsible for any decision of any investor to invest, or not invest, in any company on the Equitise platform, and Equitise makes no warranties or representations as to the accuracy, completeness or reliability of the content of any offer on the Equitise platform.
We strongly encourage companies to communicate with investors, and provide tools and guidelines for them to do so. However, it is the responsibility of the companies on the Equitise platform to communicate with investors regarding their campaign. We cannot promise that companies will provide ongoing communication.Who we allow to invest in campaigns
To invest on Equitise, you need to be over the age of 18 and a New Zealand resident. Equitise also allows companies and trustees of trust to invest in out platform.
What to look for in a campaign
Choosing the right businesses is essential to a successful investment portfolio. Some of the things investors may consider include:Team
When looking at the team behind the business, consider whether the team is competent and qualified to execute the campaign. A successful team is vital to business success. A good team is committed, motivated, passionate and knowledgeable about their business idea.Business model
A great business model is backed by experience, knowledge and research. The business should be able to validate the logic and reason behind what they are doing, and illustrate that they have the right solution to the problem. Superior ideas will be well articulated and presented, and show credibility.The right fit
Consider whether the business idea is the right fit for you and your investment portfolio. Does the idea match your beliefs? To see whether the business is the right fit for you, consider its location, industry, size of the market, stage of development and future prospects.
What to look for in a campaign
Look for a business idea with an edge. Does it have something the others don’t? Does it excel over other ideas?Social proof
The wisdom of the crowd can be a powerful thing when picking out your investment. Good ideas often attract a large amount of community support.Due diligence
Doing your own research is vital to ensure you pick the campaigns that suit you best. Investors should conduct due diligence in selecting and analysing their potential investments.
Equitise allows registered investors to browse investment campaigns, learn about early stage businesses looking for funding, invest in the ones that spark interest, and watch as businesses grow – all directly through the Equitise website. Whenever there is a return on your investment (such as a dividend, stock exchange float, or company buyout) the money is paid directly to you.Register with Equitise online
Go to www.equitise.com and select ‘register’ in the top right corner of the homepage.Validate your profile (so we know you are a real person)
You’ll see the ‘validate’ button in a few different places: in your profile, profile settings menus, investment campaign pages and every time you log in. This validation process means that you are formally registered and acknowledge that start-up investments are risky.Find campaigns you want to invest in
Select the campaign that takes your interest and conduct your own due diligence.Click the ‘Invest now’ button
Make sure you read and completely understand the risk warning and disclosure statement before committing your money to campaigns on Equitise.
Yes. Any money you transfer into an Equitise investor account is held in a dedicated trust account at Westpac bank. This is the same type of account that a law firm would use to hold money on your behalf, it is segregated from our own company operating accounts. If Equitise became insolvent, there is no chance that your money could be reached by our creditors.Is there a minimum or maximum investment?
The minimum is $500 per investment. Given the risk profile and returns distribution of early stage businesses as an asset class, history shows that you should seek to build a portfolio of at least 15-20 individual investments. The maximum you can invest is the capital-raising target, minus anything that's already been committed by other investors.The startup sets the minimum investment that it wishes to raise
There is no ‘official’ minimum investment amount that a business can raise. The maximum is the limit imposed by the Financial Markets Authority of $2 million in any 12-month period.Will Equitise advise on which startups to invest in?
The short answer is no. Although we approve all the businesses that we permit to raise funds through Equitise platform, we do not make judgements about whether it's a decent business. We believe that when it comes to early stage businesses, a large number of small investors is better suited to assess the company’s prospects than a few angels or experienced professionals. Having said this, we do our best to exclude businesses that propose to do something illegal, unethical or just not viable.
Nothing! At Equitise, you don’t pay a fee for investing. Unlike other crowdfunding sites, Equitise does not have a ‘carry fee’.What happens if the business is underfunded?
If a business fails to raise the amount of required capital in the nominated time period, funds are returned to your nominated bank account within 14 days of the campaign ending.Will my investment be made public?
Investors’ details are visible to other authorised Equitise members. This is a default setting in your user settings menu. However, when you are making an investment, you have the option of not making it public, which means that it won't be visible to other members (i.e. it will show up as ‘Anonymous’). Investors note: Even if your investment is private, the issuer and its associated parties will be informed of your identity before the investment is completed.