Want money to grow your business, but too small – or too soon – for the stock exchange? Crowdfunding is one option, as is the new NXT market, aimed at matching smaller businesses with investors.
NXT, which launched in June, is an offshoot of the New Zealand Stock Exchange with simpler listing rules and a new approach to disclosure.
NXT has been set up in response to recommendations from the Capital Markets Taskforce, which noted that New Zealand has limited capital-raising opportunities for the smaller businesses that make up the bulk of its economy.
For a number of businesses, crowdfunding may be a more suitable option.
See the NXT website for more information on listing criteria and its key features (external link) .
New crowdfunding rules make it quicker and easier for small companies to raise money. Instead of the detailed documents companies usually have to publish when raising money from the public, they only have to provide basic information on a crowdfunding service website.
Smaller companies keen to raise money in this way can use crowdfunding service providers, who act as intermediaries between those with shares to sell and investors keen to buy. A list of licensed providers (external link) is available on the Financial Markets Authority (FMA) website, along with information on how to become a licenced provider (external link) .
Companies seeking investors also have to meet certain FMA requirements, such as raising no more than $2 million from the public in any 12-month period. And if you’re thinking of investing, check out the FMA’s tips for crowdfunders (external link) .