Equity crowdfunding plugs the bank gap for Revvies Energy Strips

Revvies Energy Strips is one of the first cabs off the rank to try the new equity crowdfunding rules.

The rules allow public companies – which are not necessarily listed companies, although they can be – to raise money.

Equity crowdfunding also allows many small investors to take an interest in an early stage investment.

John Nolan-Neylan is the co-founder and managing director of Revvies Energy Strips.

He decided to raise funds for his business, which has developed caffeine strips athletes use to enhance their performance, to cement relationships with customers.

“It’s a way to get them involved in the brand and they get a piece of the pie and, hopefully, financial rewards for building our success. We end up with brand ambassadors that have a real stake in the success of the business,” Nolan-Neylan says.

“Consumers are so cynical about traditional advertising and word of mouth is really powerful. Having people that love the product and have a stake in the business and who are really motivated to get out there and talk about our product and brand is a powerful marketing tool. It’s also a great way to raise funds to expand our business.”

The next step

Revvies wants to raise $250,000 for marketing, R&D and product refinement purposes. Nolan-Neylan says the company is about 12 months away from making a profit.

“We wouldn’t expect to be profitable now, but the funds we’re seeking should take us to that point,” he said.

Sales of Revvies has tipped 100,000 packs so far, generating $200,000 in revenue.

Mr Nolan-Neylan says he expects the equity crowdfunding deal will cost between 7 per cent and 10 per cent of the amount being raised, or $25,000, and the deal was for up to 12.5 per cent of the equity of the company.

He says it makes sense to use equity crowdfunding as, being pre-revenue, it was unlikely most banks would extend finance. The raising was also too small to interest venture capitalists.

“Equity crowdfunding is democratising investing,” he says. “It means businesses like ours can raise funds and, at the same time, allows people with $1000 or even $100 dollars who would never have been able to access early stage businesses to have those opportunities.”

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Source: Equity crowdfunding plugs the bank gap for Revvies Energy Strips – Sydney Morning Herald