Capital Raising

For Love and Money: Ziinkle’s Equity Crowdfunding Slam-Dunk

March 3rd, 2022   —  

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If you’re single, hold on to your hat- because it’s about to be blown off.

Founders of Ziinkle, Elisse Alexander and Melanie Leahy, have developed a platform that doesn’t rely on the swipe-“next please”-fatigue model of its predecessors like Hinge, Bumble and Tinder.

This next-gen dating app gets people meeting in real life by providing real-time information about which venues are buzzing - with singles. Combining Google’s hospitality data with Ziinkle users' locations, this two sided marketplace acts as a heat map for love.

In early 2019, Melanie was emerging from a long-term relationship (and with the assistance of her eager wing-woman, Elisse) was launching back onto the singles' market. They would go out into the dating jungle but it didn’t seem as though there was any real-life flirtation happening. Where was the long-held eye contact across the bar? The phone number on a napkin? The sidle-up on the dancefloor? Nope, nada.

Sadly, these types of IRL interactions have become folkloric in 2022. “What - you met them in real life?” has become the standard reaction to singles who pull off a meet-cute in person.

In its pre-launch phase, Ziinkle’s major challenge was accessing the huge market of singles, to prove traction and viability for their platform, and to encourage investors to back them.

Then in 2021 they discovered Birchal’s equity crowdfunding platform and raised $455,900 -over double their minimum target of $200,000.

What is Equity CrowdFunding (ECF)?

The hint is in the name. Equity Crowdfunding is a way to raise money (equity) from the public (crowd).

In recent years its popularity has swelled because in 2018, legislation was introduced in Australia to make it easier for private companies (usually Pty Ltd, for-profit enterprises) to raise money from the public. Prior to that, it was only really accessible for unlisted public companies (Co Ltd companies, often not-for-profits).

Before ECF was available to private companies, they’d often turn to reward-based crowdfunding. As explained by the experts at Australia’s leading ECF campaign provider, Birchal:

“Equity crowdfunding is different from reward-based crowdfunding in that what you are selling is equity ownership (through shares) in the company. Many campaigns will offer rewards as an additional perk, but equity crowdfunding is the method of investing in early-stage companies at a low threshold (typically just $100).”

You can read a detailed explanation of how equity crowdfunding works here.

How does Birchal operate an ECF campaign?

Importantly, Birchal thinks critically about which segments of its audience will be most relevant to each company launching a crowdfunding campaign, to ensure the raise reaches its maximum potential.

Because Birchal has such incredible reach, every company that launches a campaign on its platform is granted access to their audience of hungry investors, of which there are two types: retail and wholesale.

An ECF campaign runs from nine to 12 weeks in total. And it’s a heck of a busy time.

“Birchal allocated a Campaign Manager for weekly check-ins, to make sure everything was on track to hit milestones, which made the process much less daunting” says Leahy.

The campaign begins at the Expression of Interest (EOI) or “pre offer” stage. This is when the company releases an engaging video, one part of a compelling marketing campaign via the Birchal platform intended to build a broad audience of interested investors, in a short period of time.

“It’s all about moving someone from not knowing about your business… to putting money into it” says Matt Vitale, Co-Founder of Birchal.

This soft launch allows Birchal and the company raising money to gauge interest from potential investors to determine the minimum and maximum amount they are attempting to raise.

The campaign then transitions to the “offer phase” where those who have expressed interest during the EOI phase, are given an opportunity to invest, after which the offer is opened up to the broader market, should the company not have hit their maximum raise figure.

Investors then receive fully paid ordinary shares and are entered on the share registry and cap table, just like any other investor.

What are Investors looking for?

In general, retail investors are limited to investing $10,000 per company, per year. The average investment, according to Vitale, is $1,500 per investment.

A retail investor is simply anyone who is not a wholesale investor. There’s a bit of discord as to what should classify someone as a wholesale investor, but at the moment one needs an accountant’s certificate certifying ownership of a minimum of 2.5 million in net assets or greater than $250,000 in income per annum. These rules are meant to protect “less wealthy” investors from making risky investment decisions. So you can see the room for argument over financial autonomy versus regulation… But that’s an article for another day.

Whether retail or wholesale, an increasing number of investors are taking a ‘portfolio approach’ to investing. That is, spreading their risk profile by investing small amounts in numerous companies each year.

When asked what investors are looking for, Vitale says it’s “a credible pathway to a 10x return.”

However, this 10x return is arguably less critical in equity crowdfunding (as opposed to venture capital) because there can exist very different motivations for investors, particularly when a company launches a campaign that has major hype around its product, or there’s significant social impact driving support for the business.

Ziinkle’s x Birchal: A Love Story

As with all ECF campaigns, Ziinkle started with their EOI. Setting up a series of highly engaging EDMs, leveraging some buzzy PR, they energised their core audience and spread the good word of Ziinkle far and wide.

Given they are building a company based on growing authentic connections, it’s no surprise the founders had direct 1:1s with many of the individuals who expressed interest during the EOI stage of the campaign. Both founders agree this was critical to their success, not just in the raise but in building and expanding their platform; acquiring users and brand ambassadors.

“It becomes your full time job - nurturing your EOIs and celebrating the wins you’re getting, so founders need to make sure they really have time to dedicate to the process” says Leahy.

Alexander and Leahy also sing the praises of Birchal’s how-to guides, which helped them break down the different stages of the raise, with what they needed to do at any given stage. Birchal also provides access to various specialists who can help with anything from videography, design, content creation, marketing to legal and accounting assistance.

Importantly, Leahy and Alexander credit the Birchal CSF raise as the most significant milestone in opening up opportunities with high net wealth and angel investors. Prior to having a working MVP, these investors showed interest, but weren’t willing to put their hands in their pockets. Their ECF round proved traction and product-market fit, making Ziinkle a very attractive investment opportunity.

In March 2022, they’ll be raising another round.

What support do you need to nail a crowdfunding campaign?

Investor relations is one of the most crucial aspects of any equity crowdfunding campaign. Unlike more traditional private seed or series A+ rounds, where founders may be juggling one to five investors, you’ll have hundreds in a crowdfunding campaign. It’s not called a crowd for nothin’.

Cake has been designed to work with requirements of crowdfunded companies, growing in tandem with Birchal, to manage thousands of investors at once. For example, Cake’s share transfer features automatically update the company’s cap table, which avoids the kind of headaches you don’t even want to imagine let alone endure.

“Cake’s system is streamlined to handle the scale, to get the money banked and with the founders, fast” says Jason Atkins, Co-Founder and CEO of Cake Equity.

Founders are at the centre of Cake’s design, from making every type of capital raise a breeze to  helping companies grow by streamlining equity offers to employees via Employee Share Option Schemes (ESOP) - Cake really is by founders, for founders.

“Cake provides an onboarding session, where they teach you how to use an already intuitive platform. Now we manage our investors and our ESOP offers on Cake. It’s taken a huge load off our shoulders” says Alexander.

If you’re interested in piquing the crowd’s interest, reach out to Birchal and book a demo with Cake today.

This case study is designed and intended to provide general information in summary form on general topics. The material may not apply to all jurisdictions. The contents do not constitute legal, financial or tax advice. The contents is not intended to be a substitute for such advice and should not be relied upon as such. If you would like to chat with a lawyer, please get in touch and we can introduce you to one of our very friendly legal partners.