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When it comes to crowd-funding, PledgeMe founder Anna Guenther reckons it is all about the crowd.
Rather than being just about money, it was about building a community around a project, knowing who the people were who supported the start-up and figuring out how to engage with them, Ms Guenther said.
She was excited about Cabinet's recent approval of new regulations for crowd-funding and peer-to-peer lending, as part of the Government's financial market overhaul.
There would be no investor caps for equity crowd-funding, although there was a $2 million cap that a company could raise through crowd-funding each year. Companies would no longer need to prepare a prospectus or investment statement before fundraising from the public.
Commerce Minister Craig Foss described it as an exciting development for both start-up businesses and investors.
Crowd-funding provided a platform where contributors received shares in the businesses they invested in, providing a new avenue for early-stage and growth companies to source the risk capital they needed to grow, Mr Foss said.
With the regulations coming into effect on April 1, New Zealand would lead the Asia-Pacific region in the development of crowd-funding regulation, he said.
Ms Guenther, a graduate of the University of Otago's entrepreneurship master's degree, said the changes would lower the barriers for people to find investors for their businesses.
Wellington-based PledgeMe is an online crowd-funding platform which, since its launch in February 2012, has raised just over $2.5 million for 540-odd projects ranging from a bionic hand to a pallet pavilion. Individuals or groups list their project on the site in the hope of attracting enough donated funding to make it happen. A success fee is deducted if the target is reached.
Ms Guenther said she knew many start-ups at the point where a $10,000 to $20,000 investment would be ''the biggest help in the world''.
Everyone had $5 or $500. It was looking for $20,000 from one person that was when it got really hard, she said.
PledgeMe had definitely exceeded early plans and expectations and it was now exciting to see where it went, she said.
Ryan Baker, co-founder of Timely Ltd, which was launched in 2012 and produces a cloud-based appointment management system for businesses requiring scheduling of their staff and services, said it was good to see legislation moving with the times.
There was a place in the investment chain for crowd-funding but it was ''not for everyone'' and he encouraged start-up founders to ''do their homework''.
''Ask yourself if cash is really the thing holding you back right now. Have you validated the business idea?
''Have you built the product as far as you can? Are you sure that crowd-funding is the solution and are you aware of your other funding options?'' Mr Baker said.
There was a genuine overhead going down the crowd-funding route that could be distracting to the business.
''You end up with a large number of financially interested parties in your start-up that you have to manage, rather than focusing on just building a great business,'' he said.
Another often overlooked factor was that the value from a crowd-funding project was often in the exposure the project got, rather than the funding itself.
It suited certain types of niche projects but he advised start-up founders to make sure it suited them first.
Upstart business incubator chief executive Steve Silvey believed the changes in regulations were ''generally a really good thing''.
Access to funding for young businesses was always important and there always needed to be new avenues for that.
There was quite a bit of uncertainty over how it was going to play out; what sort of investors would be attracted to it, how they would receive information and what their expectations of the business might be, and that would evolve over time. It would be interesting to see what models emerged, Mr Silvey said.
Otago Angels network manager Murray Downes said his personal view was that crowd funding might be ''one string to a bow'' but it was unlikely to be a reliable single funding strategy for a start-up.
It was hard enough for a start-up to get revenue from customers; it could be ''pretty tough'' trying to get revenue and funding from much the same source.
''My experience is that there's some selling required to get investors on board and I sure do not believe in 'if we build it, they will come','' Mr Downes said.
Jodyanne Kirkwood, a senior lecturer in entrepreneurship and management at the University of Otago, said it was ''a little bit of unknown territory''. It was exciting, particularly for younger entrepreneurs and small companies that wanted to grow but were not in a position to go out and get big venture capital investment.
It was great to see New Zealand ''going down this road'' for something that was really untested and that it had latched on to it quite quickly, but she was also adopting a ''wait and see'' approach.
She believed it would take one to three years, when companies had been funded through crowd-funding, to see how it worked. New Zealanders were quite cautious and she did not see it as being ''something that's going to go nuts straight away''.
Dr Kirkwood was keen to follow some of the companies to see how it impacted them.
New Zealand Venture Investment Fund chief executive Franceska Banga said the new rules could allow angel investors to develop platforms to integrate crowd-funding with their investments.
NZVIF, which was established by the New Zealand government in 2002, had watched the development of crowd-funding investment in the United States and believed it could have a positive impact on New Zealand start-ups.
''The early-stage investment community, and particularly angel networks and investors, need to consider how crowd-funding can be integrated with existing investment platforms in order to increase the capital available to young start-up companies.
''Angel investment has become, over the past decade, an important source of capital for start-ups. At the same time, non-equity crowd-funding platforms, like Kickstarter, have seen exponential growth, especially in music, design, and consumer products,'' Ms Banga said.
The new rules provided the opportunity to design new platforms that brought together the best of angel investing with the best of crowd-funding, she said.