Technology Valley renewal dependent on new forms of crowdfunding and crowd lending
2 June 2016
Crowdfunding and crowd lending will play a major role in the success or otherwise of the Hutt’s rejuvenated Technology
Valley initiative that is set to be relaunched on June 9. “For Technology Valley to grow it will require a great deal
new investment and this can be achieved through new developments in crowdfunding and crowd lending”, says Professor Gary
Mersham, a digital business technology researcher based at the Open Polytechnic.
The reason, he says, is that start-ups, accelerators, angel investing, crowdfunding and crowd lending are increasingly
becoming part of an interlinked, newly emerging ecosystem for funding businesses at various stages of growth as they
turn away from traditional funders like banks.
Crowd lending, which is a relatively new development, allows cost effective loans to be raised when a company or
entrepreneur doesn’t want to lose equity. Early stage companies are already starting to benefit from both the experience
from angel investors and local agencies like CreativeHQ and Lightning Lab. Crowd funding has led to collaboration
between Angel investors and the crowd, and this model is maturing into a practical option for businesses at varied
stages of their development. In some cases, startups are topping up angel investments through equity crowdfunding and
others were using crowdfunding to fine tune their enterprise before launching an IPO. “There is a growing confluence of
crowdfunding, angel investing and IPO’s” he said.
Equity crowdfunding inspires investing in a number of ways:
• Investment opportunities are more accessible because they are disseminated widely, reaching many who would otherwise
not hear about these opportunities.
• Most crowdfunding offers have a small minimum investment amount, such as $500 or $1000. This enables more people to
invest and diversify their investments.
• People are disposed to invest if they feel that they know enough about the space. Equity crowdfunding gives newbies
access to the same offer information, Q, and commentary as experienced investors. Everyone can be part of a conversation about an opportunity.
• For angel groups, it provides an efficient way to top up a funding round.
• For equity crowdfunding investors, it provides comfort that sophisticated investors have assessed the opportunity and
• For the company, it’s an opportunity to harness the benefits of wide brand exposure and shareholder advocates in
anticipation of a public offer. They can also benefit from feedback from backers on the product or service and pre-test
Cash-strapped governments and global institutions are turning to crowdfunding. The World Bank has said development
financing needs to go from billions to trillions and governments, donors, and multilateral organisations need to explore
crowdfunding because it provides a low-cost way to reach groups of expatriate donors who are scattered across the globe.
Crowdfunding startup Homestrings recently partnered with USAid to channel investment from the African diaspora into
innovative projects on the continent.
“The recent successful crowd-funding campaign to return Awaroa beach to the Abel Tasman National Park is an example of
this potential in the New Zealand context. The investment industry is being disrupted and redefined as are other
industries. It’s healthy, undeniable and irreversible” Mersham said.
Professor Mersham will host a free open session at the Dowse Art Museum from 10-11am this Saturday introducing attendees
to equity, reward, donation-based crowdfunding, and the recent development of crowd lending, as part of the Hutt Valley
The opinions expressed here are those of the researcher and do not necessarily reflect those of the Open Polytechnic.