CarbonScape locks down minimum $400,000 in crowdfunding

CarbonScape executive director Tim Langley (left) and chief engineer Greg Connor, in the company’s Blenheim laboratory

Keen to put equity into “green coke”?

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Total votes: 35

CarbonScape, the developers of a green alternative to coking coal used in steel making, has raised its minimum $400,000 target through online equity crowd funding.

The Christchurch-based company is looking to raise up to $1.5 million through equity crowd funding platform, Snowball Effect, offering shares at 20 cents apiece with a minimum investment of $1,000 and will use the proceeds to fund the commercialisation of its "green coke". Since the offer launched on Oct. 23, 104 investors have pledged $403,300, above the minimum target needed to lock in funds pledged from the crowd and has until Dec. 7 to raise further cash from the public. 

CarbonScape makes "green coke" from forestry waste as an alternative to coking coal, the high grade coal used in the steel industry. The business is looking to commercialise the product to capture a shift in the steel industry to more sustainable, fossil-fuel free production.

New Zealand Steel, a subsidiary of Australia's BlueScope Steel, will be CarbonScape's first formal customer to take test samples of the green coke 12 months after the business secures its development capital. The company has received support from government innovation entity, Callaghan Innovation.

With the minimum amount secured, CarbonScape will spend $132,000 on research and development, $90,000 on a green coke pilot plant design, $55,000 on two non-executive directors and $10,000 on lodging a new patent. The capital raised via Snowball is part of the company's wider financing plan to secure $3.5 million over the next 12 months, and it has already raised $2.9 million from previous offshore investors, it said.

According to its forecasts, based on the supply of 9,000 tonnes of green coke to NZ Steel, the business sees itself making an earnings before interest, tax, depreciation and amortisation loss of $484,000 in 2015, before turning to an Ebitda profit of $3.1 million on sales of $6.9 million in 2016. In 2017 it expects Ebitda of $5.5 million on $10.5 million in sales, and in 2018 it expects earnings to be $5.6 million on revenue of $10.7 million.

By 2021, the company projects revenue to have grown to $83 million, for a valuation of $415 million, on what it says is a realistic outlook. The company makes no mention of dividends in its offer documents or shareholders' agreement.

As at March 31 this year it had $4,737 cash on hand, which had increased to $105,000 at Sept. 30. Shareholders' equity was $195,043 as at Sept. 30.

Snowball is licensed under the new Financial Markets Conduct Act, which came into effect on April 1, providing a regime where projects can raise a maximum of $2 million, offering equity through crowd-sourcing platforms. The licensing is part of the Financial Markets Authority's expanded brief to bolster New Zealand's capital markets, but the new platforms do carry risks for investors, with reduced compliance obligations for small capital raisings compared to companies listed on the NZX mainboard.

CarbonScape is Snowball's third equity crowd funding offer. It follows the success of Blenheim boutique brewer, Renaissance, which raised its maximum $700,000 of new capital from 287 investors in a week and a half, and 'The Patriarch' a new film to be directed by Lee Tamahori, which raised $453,800 from 181 people, just shy of its maximum $500,000 target.

BusinessDesk receives assistance from Callaghan Innovation to report the commercialisation of innovation.

(BusinessDesk)


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3 Comments & Questions

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Well done on this business raising $400,000 but the problem is that it is not enough to actually achieve the next major milestone of a pilot plant. This requires close to the $1.5m.

So if not a lot more is raised then the business is back in no-mans land having to try and find more money to do the next stage. which of course could be at a different share price (lower or higher).

I think this was a major weakness of this offer, the minimum of $400k really means nothing. For those that invested i hope that the company can raise the additional money at a reasonable rate.

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Good point above. I had a good read through the offer last week and it reads to me that the business should be able move forward if they only raise $400K through Snowball. It looks like part of the 400K may be used for a potential NZAX compliance listing, which could make it easier to raise required capital down the line.

If they raise much more than the 400K though it says the listing will be delayed and they'll put the budgeted listing capital towards the pilot plant.

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A compliance listing will cost a lot more than the $70k they are budgeting in my experience.

You still need to prepare and sign off on very detailed documents. That also does not give you additional capital.

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