We’ve been waiting with bated breath for the results of New Zealand’s first crowdfunding attempt by a franchise group, but we reckon the reported ‘failure’ wasn’t really a failure at all.
A report on the Stuff news website claimed that Mad Group’s inability to reach its equity crowdfunding target of $750,000 was a ‘failure’. That’s true in that the Mad Mex mexican restaurant chain will now have to go to plan B to find the funds it needs to expand. But managing director James Tucker said other potential investors had come forward as a result of the campaign and he remained “100 per cent confident”, according to the news website Stuff.
We see the fact that 98 potential investors offered the company $458,900 as a vote of confidence for the company's growth plans and the fledgling crowdfunding industry in New Zealand.
The Auckland-based company is the first franchise group to have attempted to raise funds through new-to-New Zealand crowdfunding, a way of funding a project or venture by raising small amounts of money from a large number of people via the Internet. The company is the New Zealand licensee of the Australian Mad Mex restaurant chain. Its goal was to enable the company to double the number of restaurants it already owns in New Zealand by raising $750,000 from the sale of 7 per cent of its shares to the public through equity crowdfunding platform Snowball Effect.
Although Mad Mex stores in New Zealand are company-owned, Mad Group also owns Habitual Fix, a salad, sandwich and wrap chain with 15 stores which it established itself through franchising.
James Tucker said the ‘failed’ crowdfunding campaign had opened up a range of other funding options for the group. The first option would be to go back to the 98 investors who had applied for shares to see if they were still keen to subscribe for them in a private offer. The fact that Mad Group’s bank had offered further support for expansion meant it would now only need around $500,000 to see through its original expansion plan. But at the same time, other potential investors had been watching the campaign and expressed interest in separately investing sums between $150,000 and $1.5 million, said Tucker.
That’s why we believe the first crowdfunding attempt was hardly the ‘failure’ it was made out to be by the press. And why we believe the crowdfunding industry has as a bright future in little old New Zealand as it does in other parts of the world, especially for the franchising industry, which we see as a natural partner for crowdfunding in that both industries are about giving “power to the people”.
We wish Mad Group all the best in achieving a “second bite at the burrito”, as Stuff so nicely put it.
Looking to expand your franchise or business? We can assist you in a range of ways - from your feasibility study and strategic planning to structure and systems. We can even advise on possible ways to fund your expansion and recruit franchisees. In fact, everything you need to grow.
Article by Robin La Pere, No Ordinary Business and Franchise Consultants
Contact me at firstname.lastname@example.org.
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