The global pandemic has been a total shock to the world. The COVID-19 crisis has devastated many businesses around the world. In New Zealand, popular fashion retailer Ingrid Starnes was planning a significant expansion of its business. Late last year, the company signed a lease for a new store in Auckland as part of its growth plans. When the Coronavirus emerged these plans were crushed as the crumbling economy uprooted any expectations.
Instead of a complete retreat, Ingrid Starnes reached out to their community offering shares in the company. The response was said to be encouraging and so the companyh as recently launched a securities offering on PledgeMe selling up to 20% of the company:
“We recently went out to our community to ask if they might be interested in becoming shareholders in the company. The response was amazing, and so heartening, with many saying they wanted to continue to see local design, creativity and production survive, thrive and grow … This is a bit of a different equity crowdfund than usual. We are not offering a story of immediate growth – this next year is going to be determined by many Covid-19 related factors. Instead we are telling an open story of a company that’s grown over ten years by making things here, with the support of its customers and suppliers and the local industry around it, and that has plans to continue that growth into the future. Plans that could be delivered with our crowd, but that otherwise are under pressure from the changed near-term retail environment.”
Ingrid Starnes co-founder, Simon Pound explained:
“In 100 days, Covid-19 changed the world. Now the store will be opening in an altered environment. A site we committed to for footfall and international visitors will perhaps have neither for a while. But we have a plan to innovate our offering, ride out this period and continue to grow the story of local and meaningful production.”
Investors will collectively own up to 19.84% of the company if the crowdfunding campaign succeeds. Shares are $1 each with a minimum investment of $250. Investors will receive a range of discounts and product as well as non-voting shares, and those that pledge over $20,000 will receive voting shares.
“We love the idea of the deeper ownership of the brand by its customers, and how powerful a thing a group of advocates and supporters can be to help grow the company,” said Pound.
PledgeMe’s founder, Anna Guenther, said they believe supporting local businesses and production will be more important than ever after Covid-19.
We have heard other anecdotal comments of community investors stepping in when funding is needed for smaller firms. Online capital formation platforms can provide the vehicle to pair investors with SMEs in need of money.
For Ingrid Stearns, crowdfunding means a greater connection with their community.
“Succeeding in fashion requires capital and an engaged customer base and crowdfunding can be an elegant way to increase both at once. As a small local brand we compete with larger brands that produce overseas and have much lower costs of goods – our competitors can invest more in brand activation and be more profitable from the same sales base, so models like ours require innovative approaches to overcome the head start that profit at all costs can provide.”
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