Equity crowdfunding and peer-to-peer lending in New Zealand: how they work

Crowdfunding and peer-to-peer lending arrived in New Zealand in 2014 under the Financial Markets Conduct Act, and the FMA has licensed providers of both since. They’re genuine alternatives to a bank, but they’re different animals from a loan: more public, more preparation, and suited to particular businesses.

Equity crowdfunding: selling shares to the public

How it works

1. Your company chooses an FMA-licensed crowdfunding platform.
2. The platform checks the company and the offer, and you prepare an offer page: the business, the plan, the risks, the financials and the valuation.
3. You market the campaign, often starting with your own customers and network.
4. Investors commit money, usually in small amounts.
5. If the minimum target is reached, shares are issued and funds are released, less platform fees.

The limits

Under current rules, a company can raise up to $2 million in any 12-month period through crowdfunding without a full product disclosure statement. Proposals in the government’s Phase 2 capital market reforms, being consulted on in 2026, would lift that cap; submitters such as the NZ Shareholders’ Association have supported a higher limit with per-investor caps. Check the FMA’s current guidance before planning a raise.

Who it suits

• Consumer-facing brands with loyal customers: breweries, food and drink, outdoor gear, local hospitality groups.
• Businesses whose customers becoming shareholders is itself valuable marketing.
• Companies that can tell a clear growth story and handle public scrutiny.

Who it doesn’t

• Businesses needing money in weeks.
• Owners who don’t want hundreds of small shareholders.
• Businesses without a compelling public story.
• Sole traders and partnerships (you need a company to issue shares).

Peer-to-peer lending: a loan funded by many investors

How it works

A licensed P2P platform assesses your application, sets a risk grade and matches your loan with investors who each fund a slice. You repay the platform, which distributes repayments to investors. From your side, it feels much like a normal term loan.

Who it suits

• Borrowers with a solid credit history who want a fixed repayment loan.
• Moderate, well-defined needs.

The caveats

• Credit history weighs heavily. P2P pricing and approval are strongly influenced by credit scores.
• Business availability. The New Zealand P2P market has leaned toward personal lending; business options are narrower.
• Raise limits. P2P business borrowing has been subject to the same kind of annual caps as crowdfunding, also under review.

Crowdfunding and P2P vs a direct loan

Rewards crowdfunding

There’s also rewards-based crowdfunding: pre-selling a product or offering perks in return for support, without giving shares. It’s useful for validating demand and funding a first production run. business.govt.nz notes the trade-off that exposing an idea publicly can create intellectual property risk.

Making the choice

Ask yourself:

1. Do I want investors, or just money? If just money, debt is simpler.
2. How fast do I need it? If weeks, crowdfunding is out.
3. Would my customers want to own a piece? If yes, equity crowdfunding has a marketing upside few other options offer.
4. Is my credit record strong? If not, P2P may be hard, while a property-secured non-bank loan may still be possible.

What a crowdfunding campaign really involves

Owners often underestimate the work. A typical equity crowdfunding raise in New Zealand involves:

1. Preparation. Getting the company’s constitution, share structure and financial information in order, often with a lawyer and accountant.
2. The offer. Writing an offer page that explains the business, the use of funds, the risks and the valuation in terms ordinary investors understand, and that the platform will check.
3. Pre-marketing. Building a list of interested customers and supporters before launch. Campaigns that open with strong early commitments tend to attract more.
4. The live campaign. Weeks of marketing, answering investor questions and updating the page.
5. Completion. Issuing shares, updating the share register with the Companies Office and setting up ongoing shareholder communications.

After the raise, you’ll have obligations to keep shareholders informed and to run annual meetings. That’s a permanent change to how the company operates.

Valuation: the number that matters most

In an equity raise, the valuation decides how much of the company you give away. Set it too high and the campaign may fail; too low and you give away more than you needed to. Independent advice on valuation is worth the cost. Debt has no valuation question at all, which is part of its appeal for owners who expect the business to be worth much more in a few years.

Where we fit

We don’t run crowdfunding campaigns or P2P platforms. We arrange direct non-bank lending: property-secured business loans from $20,000 to $1m, and unsecured loans and lines of credit for businesses usually trading 6+ months. If crowdfunding suits your business better, that’s worth knowing too.