Josh Daniell is one of the co-founders of Snowball Effect – an
Auckland based equity crowdfunding platform that has hit the ground
running. Beginning a little over a year ago in August 2014, Snowball
Effect has successfully raised more than $8 million for an assorted
number of organisations including a brewery and a company
specialising in drones. Head of platform and investor growth, Josh
has played a pivotal role in Snowball Effect’s success. With a string
of successes in their first year, it is no surprise that Snowball Effect
was voted as one of the ‘Rising Stars to Watch’ in the Deloitte 2015
Fast 50 Regional Awards
Can you tell us a little about what Snowball Effect does?
Equity crowdfunding is when a company raises funds by offering shares
to investors online. For companies, it’s a capital raising service and
access to a wide investor audience, so it’s a quick and efficient way to
raise funds. For investors, it’s a simple channel to discover and invest in
early stage growth businesses.
The company sets a minimum target. If the target is met or exceeded,
the company gets the money and the investors get shares in return. If
the target is not met, all money is returned to investors.
Each Kiwi company can raise up to $2 million in any 12 month period
by offering shares to the New Zealand public. Importantly, there is no
need for a regulated offer document such as a ‘product disclosure
statement’. This enables companies to raise funds from a large pool of
potential investors at low cost.
What advantages does Snowball Effect offer to
New Zealand businesses?
Every company thinking about raising funds should consider these
• Do I really need the cash?
• If so, how else can my funders add value to my business?
Equity crowdfunding is one of the equity fundraising options for
companies. There are other important options, like debt funding
and angel investment. Each option comes with different value
alongside the cash.
Companies are typically drawn to equity crowdfunding for access
to a large investor pool, the broad media exposure and shareholder
brand advocates, or the efficiency of the capital raising process.
Where did the idea for Snowball Effect come from?
It came from a desire to make a positive impact on the New Zealand economy,
and more particularly in the SME sector.
For companies raising funds, the equity capital market does not work
efficiently, especially in the private equity space. And investors have not
had easy access to private equity investment opportunities.
These two groups were struggling to meet, and we knew there would
be demand on both sides of the market if we could provide the right
technology and services to bring them together.
As one of the Co-Founders’ of Snowball Effect, did you face
many challenges in your first year?
Plenty! I think every founder will go through days where you doubt your
abilities to achieve your aspirations. You can reduce the risk of these
days getting the better of you by surrounding yourself with a good
support network. That may be co-founders, advisors, independent
directors, or others. And you can ‘right-size’ the challenges as they arise
by stepping back and making sure you’re looking at the big picture.
What has been a significant learning curve for you and your
team at Snowball Effect in your journey so far?
Listen to feedback, but also listen to your instincts. We’re pioneering
a brand new market (which is a new market all around the world), so
we need to make judgements that can’t necessarily be tied to historic
reference points or the status quo.
Based on your experience, what do you suggest are three key
things that can be done to encourage more young people to start
their own businesses?
1. People need to understand that it’s an option. So we need to tell
stories about people who have done it.
2. Make it easy to access support networks. These include advisors,
shared spaces, incubators, accelerators and investors. Support
networks will help to grow the business if it’s good, and kill it if it’s bad.
3. Give young people a taste of entrepreneurism. It’s not for everyone,
but it hooks those who love it!
You’re speaking at our upcoming event ‘It’s Business Time’ –
what can attendees look forward to hearing about?
I’ll be talking about funding early stage businesses. I’ll attempt to unravel
the jargon and complexity around early stage business finance, and
explain the various options and when they are best suited to a company.
Snowball Effect have just celebrated their first 12 months of equity
crowdfunding in NZ – check out their year in numbers.