Crowdfund pioneer a Rathkeale old boy

By Gerald Ford gerald.ford@age.co.nz -
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Wairarapa-born co-founder of equity crowdfunding business the Snowball Effect. PHOTO/SUPPLIED
Wairarapa-born co-founder of equity crowdfunding business the Snowball Effect. PHOTO/SUPPLIED

Masterton-born Josh Daniell is bringing small-town directness to the big-city world of raising business capital.

Mr Daniell, 29, is one of the founders of the Snowball Effect, New Zealand's top pioneer business in the new field of equity crowdfunding.

Founded by Mr Daniell and three others in late 2013, the Snowball Effect has helped raise more than $16 million for business ventures in its two-and-a-half years of operation, and claims more than 70 per cent of market share in the fledgling industry.

Equity crowdfunding allows businesses to reach everyday investors online, without the expense and regulatory hassle of floating them on the New Zealand Stock Exchange.

Traditional share listings require businesses to have a detailed Product Disclosure Statement, which Mr Daniell says is an expense beyond the reach of many smaller enterprises.

Through a licensed crowdfunder, however, a business can access potential investors at an earlier stage and with fewer boxes to tick.

The Snowball Effect describes itself as a marketplace, and its website boasts successful funding operations that include the recent New Zealand movie Mahana, based on a Witi Ihimaera story and starring Temuera Morrison.

"It feels like what we are doing is giving a material net positive impact on New Zealand, and I love doing that sort of work," Mr Daniell said.

"For companies it's improved access to finance. For investors it's a simple channel to invest in and support a productive economy... that just hasn't been done online before in New Zealand."

Mr Daniell attended Alfredton School, Hadlow School and Rathkeale College.
He is the son of Derek and Christine Daniell - Derek Daniell being a well-known
Masterton businessman and stud ram breeder, and former district councillor, and Christine a published non-fiction writer.

His Wairarapa upbringing brought a respect for primary production, which he describes as "an interest in adding something of value to the world which is more down the need end of the scale rather than the want end of the scale" - along with awareness of the value of being genuine.

"I've seen guys kicked to [school in] Wairarapa to straighten them out," Mr Daniell said.
"Within a certain time period they fall into step... I think in smaller communities, your reputation is known, so you can't hide behind bravado. You have to walk the talk."

Mr Daniell studied law and English at the University of Canterbury, afterwards working in Auckland for renowned New Zealand law firm Bell Gully, in mergers and acquisitions.

"I realised how ineffective and clunky the capital-raising process was," he said.
Crowdfunding is limited in the retail market to $2 million a year, but there is also room for private investors or wholesale investors - those with a strong asset base or who are licensed traders.

"If the balance comes from wholesale, you can raise as much as you like," Mr Daniell said.
The new industry has been enabled by new legislation, and its pioneers have had a hand in writing the regulatory framework.

"New Zealand has fared very well. It's been held up as a test case for a successful launch. We've watched very closely other markets like the UK, which is the oldest, and we've purposefully gone in a different direction. We believe we can do it better," Mr Daniell said.

"I take my hat off to the policy makers."

Mr Daniell believes the industry is set to expand in the direction of wholesale investors, and may well develop a "secondary market" where investors can trade shares between themselves.

Snowball Effect is based primarily in Auckland, but Mr Daniell has recently set up shop in Wellington, raising the prospect that the next big opportunity could come out of Wairarapa.

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