Why PurePods decided to raise capital with Snowball Effect
- Written by Michael O'Byrne
- Published on
At Snowball Effect, we enjoy having a front-row seat to the growth journeys of New Zealand's most innovative and exciting high-growth businesses. One of those businesses is PurePods. The Kiwi business offers guests immersive five-star luxury accommodation experiences, with their PurePods situated in breathtaking New Zealand locations.
In this article, PurePods Director and Snowball Effect's Director of Growth Capital, Michael O'Byrne, reflects on PurePods growth journey and their capital raising experience. Michael joined Snowball Effect after experiencing first-hand the value the team and platform provide in the New Zealand capital markets.
After nearly 20 years of working in finance in London, I returned to New Zealand with my young family in late 2019. I wanted to use my experience to support and invest in Kiwi growth companies.
I got to know the team at PurePods, the brainchild of serial inventor Grant Ryan. I was impressed by the vision for the "world's coolest hotel chain", showcasing 100% Pure New Zealand in luxury, all glass cabins.
However, with Covid disruptions and resourcing challenges, it was clear the company needed more capital and governance if it was to achieve this vision. As a result, I pulled together a group of investors to help support its next step.
We made good progress, building our first PurePod in the North Island, two in Rakiura Stewart Island and proving the resilience of the business model. With borders reopening, it was clear that there was an opportunity for us to accelerate growth. The key question was how to fund it.
As a board, we considered a range of options, including the possibility of trying to raise funds via our own networks, using a professional services firm, leveraging angel networks or approaching Venture Capital (VC) or Private Equity (PE).
None of these options were quite right. PurePods was either too early stage, too late stage, too big, too small, too capital intensive, not "global" enough or not enough of a moonshot for the Angel investors, VCs and PEs.
Trying to raise the funds ourselves would have required additional internal headcount, and we couldn't be sure of success, while the professional services firms wanted to charge significant ongoing retainers and hourly charges regardless of the raise outcome.
It confirmed my impression that there is a real gap in the market for companies with a proven concept looking for capital to scale (in that $2-10 million range).
This was when I came across Snowball Effect.
I was initially pointed towards Snowball by my wife, who had been impressed by their support of female-founded companies such as Hello Cup and Jeuneora.
I was impressed by Snowball's high success rate and the positive feedback from companies that have raised via the platform. It was clear from their investor base that it was far more than "crowdfunding".
PurePods had a clear strategy, and we were keen to secure investment from a broad investor base rather than a single dominant investor. We were also keen to give our landowner partners and guests the opportunity to participate in the success of the business.
Snowball Effect provided the complete capital raising solution, from preparing the Information Memorandum (IM) to engaging with investors to processing the investments.
Concerns around having a large, diffuse shareholder base were alleviated by Snowball's nominee shareholder structure (nearly all the new investors from the raise fall under a single shareholder nominee), as well as the efficiency of using Orchestra for shareholder communications.
We ended up raising over $3m via Snowball Effect. The raise attracted investment from PurePods' landowners and guests, along with new investors from Snowball's extensive investor database, and led to an increase in PurePods' website traffic.
Are you interested in learning more about raising capital for your business? Our team are happy to answer any questions and can be contacted at [email protected] or by calling 0800 SNOWBALL.
