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Kickstarter opens to Kiwis

Kickstarter has today officially launched in Australia and New Zealand.

Earlier spokesman Justin Kazmark told NBR ONLINE it's not a case of Kickstart NZ launching, but New Zealanders getting the chance to join the single Kickstarter site.

"There is just one website and the community can continue to discover projects from across the creative universe regardless whether they're located in the US, UK, Canada, NZ, Australia," Mr Kazmark says.

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Crowdfunded equity possible in NZ from April 1, 2014

Aug 29: There's good news for Kiwis who've looked enviously at US site KickStarter.com, which allows startups to raise thousands - or even millions - for a bright idea via hundreds of micro-donations.

Crowd-funded equity will be possible from April 1 next year, thanks to the Financial Markets Conduct Bill, which passed its third-reading in Parliament last night (the law already allows for non-profit crowdfunding sites, such as PledgeMe.co.nz, but until April 1 at least it is illegal to make a return, or to offer equity; the new law also allows for peer-to-peer lending. In the US, legislative change is also expanding the role of crowdfunding sites.Crowd-funded equity will become legal under the JOBS (Jumpstart our Business Startups) Act, which comes into law on September 23.). 

We've seen a number of New Zealanders use Kickstarter.com, including Syrp and film director Taika Waititi - but Kickstater's US only escrow payment system means both needed to go through the added complication of adding a US partner.

"The introduction of an equity crowdfunding regime by April 1, 2014 is excellent news," lawyer and intellectual property specialist Rick Shera tells NBR.  

"It puts New Zealand on a par with or ahead of other countries seeking to attract new ventures that might not be able to obtain funding any other way," the Lowndes Jordan partner says.

"Crowdfunding is not the answer to all equity funding requirements, but it will be a useful addition in the start-up space and may ultimately have spin-off benefits in getting more New Zealanders into our capital markets as they become used to owning shares."

Mr Shera adds, a warning, "Having masses of very small stakeholders may not be for the fainthearted though as has already been seen in non-equity crowdfunding arenas like Kickstarter." 

KickStarter has come under regulatory scrutiny in the US after several high-profile crowd-funded projects have failed to eventuate - in many cases because wannabe entrepreneurs were way to optimistic in their projectons. The site now requires people to post more detailed pitches. But as Mr Shera intimates, it's an inherently high-risk arena. 

ckeall@nbr.co.nz

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Comments and questions
10

Today we see the FMA warn against a FX trading scheme, we have a financial advisor who has "ripped off investors" plead guilty, we have a warning about a low ball offer for shares and now we have a new scheme that can be used by people to rip off investors. Well done NZ.

Apparently one of the benefits is that it might get more people investing in shares - wait until people loose money under this scheme and the headlines will be investors loose money investing in shares This will in the medium term potentially destroy investors interest in equity.

Read the article again. People are not providing equity, they are making a donation, therefore they are not investors.

Read the article again, they are talking about the right to issue equity, which is currently illegal. I have no issue with the likes of kickstarter etc but it is different if you are issuing equity, in my opinion.

Anon dont be so cynical there are many successfull peer to peer lending companies in the US and UK. Maybe you should do a little reaseach on the subject as the internet is displacing many business models and money lending / investing via peer to peer platforms will be no different. Lets face it at the moment its just the banks taking our money at 3% and lending it at up to 25% on credit cards and the likes. Investors deserve a bigger slice of the pie. With the internet assessment of risk versus returns is easier. The government should be congratualted on taking a leading role with this ground breaking legislation and the FMA do have teeth and are well equiped to police. Yes there may be a few losses on the way but you cant stop progress or eliminate risk in anything.

my comment refers to equity not peer to peer lending. This is a very different asset class. I have done some research, actually looked at working on a peer to peer lending opportunity in Australia and NZ, realised it was illegal (at a time people were investing in the sector and then shocked when they were told they could not do it). Decided not to proceed as the economics in NZ especially looks very marginal, and had to wait 3 - 5 years for the laws to change.

Kickstarter is a useful comparison in that it is a crowdfunding site but I think it's important to note that it does not, at this stage, allow equity (shares/stock) funding. There are a few NZ equity crowdfunding innovators waiting in the wings (some have been waiting in frustration for many years) so it'll be great to see them launch when the new changes are implementtd next year.

I like the idea of Kickstarter and similar crowd-funding services but I'd be worried about IP protection.

NZ is somehow at the top list for countries where it is easy to do business ...

What the hell happened to crowd-funding? Who did it pee off? After god knows how many reviews, committees, govt. reports we maybe, might get something in middle of 2014? Have they not been paying attention to Internet trends? NZ market would be tiny by comparison anyway so needs to be as nimble as possible using the small country first mover advantage.

Just get out of the way already and stop trying to be controlling, nannying busy-bodies.

Kickstarter has some strong local competition to deal with i.e. PledgeMe

If you want global reach, you would use Kickstarter hands down - the biggest risk would be being lost in all the other projects.

Pledgeme maybe good for small NZ projects but to raise serious dollars, will be too limiting.