Funding innovations like crowd-sourced equity funding and peer-to-peer lending are natural accompaniments to the digital age.
It's fintech. Like greentech, cleantech, biotech and nanotech - it's real, happening and has enormous upside.
Peer to peer is essentially an online marketplace that brings together individual investors and links loans to a business, while crowdfunding focuses more on a specific project with investors generally receiving equity in the company.
They are funding options that give everyday New Zealanders the ability to invest in modest ways in small businesses and start-ups, and it's this empowerment of ordinary citizens that is truly disruptive.
As models evolve, the 'bottom up' rather than 'big bank down' approach could be a game changer.
There's also a secondary capacity-building component that should not be overlooked. Linking-up a business with a motivated investor can provide the additional guidance, business experience and mentorship to take an idea to the next level, or to scale-up an already promising innovation.
Savvy players in the market will be well aware of developments in fintech. Clearly, businesses that have been early in embracing these innovations stand to gain much.
For some businesses, they may be able to access funding where once they couldn't, which is critical if innovative Kiwi businesses are to flourish.
Though crowdfunding and peer-to-peer lending are relatively new, there are early success stories. Snowball Effect, the first approved crowd-sourced equity funding platform, reported it has supported five successful offers, raising $5.5 million since launching in August 2014.
If we jump across the Tasman, Australia is taking a graduated, cautious and evolutionary approach to the development of a regulatory framework underpinning crowd-sourced equity funding and peer-to-peer lending.
Yes, such funding innovations are not without their challenges, including appropriate investor protections, however it is better to be on the train when it's pulling out of the station than trying to catch up when it's got a full head of steam.
As for the prospects of long-term success, the usual marketplace rules and doing due diligence prevail.
Good outcomes are dependent on attracting investors and quality innovative businesses. Investors will be attracted where there are quality investment options and a secondary market, like the sharemarket to dispose of their investment.
Quality innovative businesses will be attracted if they are reasonably certain that they can meet their funding needs at an appropriate price.
One option for linking like-minded investors and businesses would be some form of trans-Tasman mutual recognition of the regulatory frameworks underpinning crowd-sourced equity funding and peer-to-peer lending once Australia's settles on its preferred approach.
This should seamlessly allow innovative Kiwi firms to access Australian investors and vice versa without further red tape. This will increase the number of potential investors without undermining important investor protections.
And why stop at Australia? New Zealand could look to create mutual recognition agreements across the region to significantly expand the pool of potential investors that innovative Kiwi businesses can turn too.
This also has the important advantage of increasing the probability of liquid secondary markets evolving, which in turn will attract more investors.
There's also merit in investigating options for a voluntary, low-cost rating system for those businesses seeking investment that is similar to a credit rating.
This would help improve the quality of information available to potential investors without significantly increasing the costs to businesses seeking funding.
It's something the Korean Government has done with its Kibo Technology Rating System (KTRS), which has been operating since 2005.
Ultimately, supporting the growth of funding innovations like crowd-sourced equity funding and peer-to-peer lending is about jobs.
Confident, outward-looking and innovative Kiwi businesses that have easier access to funding than was previously the case will be more likely to invest in new equipment, new products and new markets.
All that results in more jobs and a growing economy - the hallmarks of a thriving capital market.
• Alex Malley is chief executive of CPA Australia.