Simeon Burnett – CEO & Cofounder, Snowball Effect

Thank you so much for joining us today, you’re up in Auckland, I’m in Wanaka… Good to be on here, thanks for the invite. Firstly, five years to be in business in
anything is a great milestone for anyone let alone when you are the
first if you like, or pioneering in a brand new industry as you’ve sort of done in the financial markets here in New Zealand. Thinking back to the before you
were launching Snowball Effect, does it feel like five years? It probably depends what day you ask me whether it feels like five years or not On a good day, and I think on an objective day, probably is the way to think about it, you can think actually we’ve achieved a lot
in a reasonably short space of time but like any any person who runs a
business sort of big medium or large you know there’s a there’s days that you have of
course we are you know you feel like you’ve been slogging away forever. But I
think as I say you know if you be objective about what’s happened and step back to look at it, I think I can probably be pretty proud of what we’ve in the business over that period of time. So no it’s been a good first
five years. We’ve been really happy with progress and you know it’s taken I guess
like any other young business is probably taking a bit of a different
path but it’s been very positive so happy birthday so far I remember back to
you know before you launched and the news came out you’ve got the ticket from
the financial markets conduct authority to do equity crowdfunding again you know
very new New Zealand and indeed we were ahead of Australia right they only got
the ability to to operate this sort of a funding market I think a year or two ago
you know you’re five years into an overnight success that’s a but actually
before there there was a couple of a couple of years of planning and working
through the autistics wasn’t there yeah was originally unique situation to be
everyone because of walker just meet you sort of letters written Tory reform came
through through mid 2014 but I guess for us it was unique as well
because you know if you if you build another business this I was I a software
business you know you get sort of any business ready with you about you know
you’re just gonna get out there and you’re gonna get some fallout in
people’s hands or get people using it and tasting it or whatever that the case
may be and you sort of just go from there and this is quite definitely
because this event is really gate in front of us and there was only so much
you could do before that gate was opened and so we were you know Ibiza with
drafting regulations underneath you may on the CEO the ceiling so we had to go
through this process of feedback around that sort of thing and the license will
actually operate build something indeed you know how they like so we were the
guinea pigs through and that was an interesting choice I guess it was you
know I think probably pretty smoothly and you know I think comparing to what
the cases been and will be in another country to another review from
jurisdiction yeah I think we got great with start sort of freedom you know
which is good and the regulations which have been designed to be reasonably user
friendly part of the reason at least why we formed the business was to have a
real positive impact on the capital markets here in New Zealand meaningful
make relevant be launched and go from there so you know with respect to them
just in terms of some of the you know I guess the impact stats
you got any numbers top of your mind what have we what are we seeing snowball
effect achieve over the five years that you’ve been
going in terms of business has helped funds raised innovation accelerated you
know ultimately what we want to me during is this kind of returns to
investors and you know there’s probably another three or four years I would
guess before you know you start to get some meaningful stats around that kind
of thing a little bit about you know kind of a
company side of it but I think CVS to work both ways getting by getting a good
return on the roof taking on as well and it’s seen as a as a really viable asset
class and rather than sort of donating so I think that’s a really important
thing and but in terms of the general sense that you would look at you know if
things like capital race I think we just talked over 57 million anybody capital
raised in their five-year period which is probably about on on par with we we
thought we’d get to about five years ago I just sort of been steadily building
year-on-year which has been really cool we’ve waiting with about forty five
different companies some of those companies have been around race and so
you know that’s again it’s a good number companies work with and we’ve been able
to introduce you know multiple directors to operate and support those companies
and governments build and which is I think you know another space where
there’s room for improvement within the EMU zealand ecosystem and then we’ve got
you know 21,000 and missus all those different districts and a thousand
unique investments through our platform we have a reinvestment rate of about a
third so what that means for every team and this one sort of come through you
get around about three to four people making at seeking investment or third
investment so on so forth which is good because you want to see
or recessive classics it is at the higher risk fiend of long you can put
your money into it and you want me to see people some big sheets of about
their folly of approach so they’re not sort of loading up the proverbial wings
into one basket so that’s been pleasing as well and something that we pretty
closely what what are the types of businesses or the the uses of funds did
you same succeed or do better in some respects then say others like I’m just
thinking it from the entrepreneurs point of view I’m considering my options you
know don’t go direct to a local angel investment club or you know or do I go
Crowell equally funding more what yeah I think you could have need to understand
what the landscape is in New Zealand and I think you know make sure you’re well
researched on what your options are because there are options out there like
it’s sort of the way that we would think about it here is it’s going to be angel
type and business for the really stays see angel series investment rounds do we
sit with probably but for this so you kind of want to be you know a million
bucks review about that we you know you’ve clearly got a product or service
that people like and one more question around scaling their business and
growing it through their next phase it’s for five million of revenue and then on
from there that’s probably where we would kick in if we’re thinking about
the new zealand landscape or all the capital raising ecosystem and well I
think any any founder on but never really wants dead I think it’s pretty
good understanding because there are options out there you know you can go
down perform angel piano and they’re different angle groups around the place
you know the sea you can come up to us with your own need work
the freedom families and then you look offshore you know there are depending on
the clock business secular yeah potentially offshore visas they’re going
to be you know a good option for you but I think ultimately you want to get as
far as you can I think without trying to raise capital different straight that
you know you’re you’re a business owner you’re an entrepreneur who can take a
business a long way with not much get some good revenues really understand
your customer kind of move that classic understand what problem you you all
right your business insolvent and then whatever route you take they will see
you stand you in good stead for going from there I think it’s well you know
you you want to also get people around the business that can really add value
to you and add value to your business and I think if I think about so
Northington and what we’ve done you know something
that I’m really grateful for is people that we got on board really early on and
you know we kind of did it and sort of ignorance of anything really but it just
was the decision we made us proceed right at the time being you know having
good people that really well you know that was that was really good and you
know would have got to where we are today without those people who are still
involved so and this that’s something possibly open about money that that I
thoroughly recommend based on our experiences until you what we see
there’s some super cool advice you guys you know and this is the other thing
we’re all going to be mindful of years well and you yourselves you know you
you’re helping other entrepreneurs build their dreams
bringing their visions to life through services you provide but at the same
time you’ve been going on your own entrepreneurial journey and so you know
look it’s off to you for making that happen getting this far in you know
looking certainly looking forward to the next five years as I’m sure you are so
and if we look ahead to there what sort of what’s next for snowball
effect I believe you’re gonna be launching into Australia that’s on the
horizon Australian website so there’s a website a little bit of beasts of
victory so the idea is taking businesses to Australian investors can we know that
all these have a recent applies for Kiwi businesses half the probably putting
funds here in New Zealand are the fans and I’m traditionally done pretty well
markets and we know that they’ve got an interest in investing into and deprive
Kiwi business so what we’ve done is build our websites are several
Combinator which is just a website for planning were sophisticated Australian
investors to register and then they can tell us as they one of the piston will
be involved with what industries or systems that kind of thing and then we
all seen the opportunities we’ll be in touch with them when the right kind of
business comes along matches their profile so that’s where we’re starting
off we’ve got a number of conversations going over in Australia at the moment we
may do something and it’s just going to map I do think there’s an opportunity
for I give some greater flow of capital and information between used in
Australia they’ve got a deep capital market and you know there’s plenty of
businesses that want to do what I currently doing business in Australia
that could benefit from some Australian money going in you know we’ve started to
see couple of BC’s set up shop here in museum and you know Tommy after a
particular type of company a specific date they warned me and but there’s
plenty of other businesses as well that that may not meet mandate suitable for
most leases that are interested in getting into some Australian mining
words and at using some the equips Nestle thing as well until the expertise
so there’s just something that we’re whistle
picking off quietly and other thing that we’re building is we’ve already got a
she register as bad as so healthy website so she released there is kind of
a record the illegal record of how many shares is
have been issued on your camp table and on the investor side how many shares
they own a lot of people sort of think it’s the company’s office but the
company’s office is really just meant to be a shit register head so we’re
building this as they was putting it out already builder splitting it out
printable features rather to make it a really single source of truth for
service providers lawyers accountants directors of companies and a few others
so that they are all looking at the same information whether it’s at tables
whether it’s legal documentation and all the things that surround a young company
and a company as it’s growing and it would be change over time and need to be
tracked and monitored because things can get pretty of those things and enter it
or get lost you can often happen and then next question is around you know
maybe a secondary market there was some talk a while ago of perhaps looking to
develop some sort of market we have people who have invested in some of the
snowball victim cattle raisers may be able to now put their shares at they own
up for sale or to trade or on a secondary sort of market what’s yet
still on the on the cards yes we’re not building a market whose domain to be
people about what I say here this rickety reasons but we know some
technology which really allows a company to facilitate the training of shares
within that company so it’s an awesome for them to provide shiho’s with the
ability to go in here and by himself and so create for his parents your own that
process and some nice easy user base for people to to see what’s happening get
access to information understand who else is trading in debt market and but
it delivers company even allowed to raise capital through snowball effect
but really any company in New Zealand that wants to offer some liquidity to to
shareholders and potentially bring it to us and offer the amazing technology and
administration service which provides effectively a window or a beat for their
trading to take place so it’s not sort of a market that range 250 days a year
it’s just some piece of software that allows it a window into the business so
it could be seven days routine days with some information and and then obviously
texture share industry and it allows those ambitious to go and buy some water
she is in clears the volume of buyers and sellers at a at a market price so
there’s something in word is shifting in the market at the month get a pretty
good response to so you’ll probably see a bit more about that next year so and
this last quarter has really just been a bit of testing market clearly you guys
feel that from what you’re seeing out there that there is a demand for that
you know otherwise you actually wouldn’t be looking into the right pattern
yeah you know kind of genuinely within the New Zealand market you know we know
that you know there’s probably about 40 companies in New Zealand that they have
real money and the risk really struggle and there’s a whole bunch of reasons for
there that’s the size of the market some of some of the structures around the
market in terms of what brokers will uncover and sort of provide information
around so that certainly helps facilitate a lack of liquidity with it
music but you know we’re keen to explore other
alternatives in different models around city trading that that we think and we
hope will provide real value for those companies that do wanna offer their
shareholders equality well guys service has been some young
Burnett he’s the CEO one of the cofounders of snowball effect
celebrating five years existence and the New Zealand capital markets

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