A New Zealand company that successfully raises money from its community through equity crowdfunding hits a wall at $2 million per year. That threshold was set when the Financial Markets Conduct Act took effect over a decade ago. It has not changed since. Founders, platforms, and investors are now pushing for a $10 million cap, and the government is reportedly considering a formal review. The question is why it took this long.
A 2018 research paper from Victoria University of Wellington argued the cap should be lifted to $5 million. Eight years later, the ask has doubled and the policy has not budged.
The dead zone between angels and venture capital
The crowdfunding cap does not exist in a vacuum. It sits inside a well-documented funding gap that punishes companies at exactly the stage where momentum matters most.
Angel rounds in New Zealand typically range from $250,000 to $1 million. Institutional venture capital requires demonstrated traction, revenue, and a clear path to scale. Between those two stages lies a dead zone, roughly $1 million to $5 million, where crowdfunding should logically play a bigger role. The $2 million cap cuts off that channel before it can do meaningful work.
Enterprise Angels CEO Nina Le Lievre has described the structural problem plainly: “Banks prefer collateral. VC funds need traction. Early on, what most founders need is belief, backed by capital that understands the journey from prototype to product market fit.”
Meanwhile, angel investment is growing but being spread more thinly across more companies, meaning individual firms are getting less from the angel channel, not more. The squeeze from both ends is real.
Record VC numbers still fall short
Venture and early-stage investment hit a record $587.6 million in 2024, up from $384.4 million the year before. That sounds healthy until you put it against the industry’s own estimate that NZ high-growth startups will need $5 billion in investment over the next five years. The best year on record represents roughly 12% of that five-year target. The maths does not work without additional capital channels.
The government’s Elevate NZ Venture Fund was set up in 2020 with $300 million to plug Series A gaps and received a $100 million top-up in Budget 2025, but has since been wound back. Blackbird Ventures partner Phoebe Harrop has been blunt about that decision: “I think it’s a mistake to give up on Elevate this soon.” Blackbird has invested $220 million into 36 New Zealand startups, with 85% at seed or pre-seed stage.
NZGCP’s Aspire NZ Seed Fund completed 21 investments in FY25 and realised $49.5 million from exits. Those are genuine successes, but they are exits from bets placed years ago, not evidence the pipeline for the next generation is healthy.
Europe is already moving
New Zealand is not the only country grappling with crowdfunding thresholds, but it is falling behind. In Europe, a coalition of 21 national associations, 36 platforms, and 4 service providers representing over 90% of crowdfunding volume has called for the threshold to be raised from EUR 5 million to EUR 12 million. Their argument is direct: “the current EUR 5 million threshold under the ECSP Regulation has become a bottleneck for growth, and a targeted adjustment is both justified and necessary.”
The EU is also moving to align its crowdfunding threshold with its prospectus exemption threshold, creating a smoother path from community raises to public capital markets. New Zealand’s proposed $10 million cap would still sit well below the European benchmark on a proportional basis.
The direction globally is unmistakable: regulators are recognising that low crowdfunding caps protect incumbents more than investors.
What a higher cap would and would not fix
Lifting the cap to $10 million would let growth-stage companies run a single meaningful raise rather than stitching together inadequate rounds. It would keep retail investors in the tent on growth stories that currently go to institutions or offshore funds. And it would give platforms the scale to invest in better compliance infrastructure.
It would not replace Elevate, fill the $5 billion funding gap on its own, or solve the secondary market liquidity problem that makes crowdfunded shares hard to exit. The Capital Markets 2029 report, sponsored by NZX and the FMA, noted six years ago that many SMEs are “generally too small to viably list on public markets.” NZ capital markets showed low activity in new listings in 2024. The public exit route remains narrow.
Ethique founder Brianne West has described equity crowdfunding as a “massive marketing opportunity” as much as a funding one. That dual benefit, capital plus community, is exactly what gets lost when the cap forces companies off the platform.
Inertia is not caution
The $2 million cap has been known to be too low since at least 2018. The companies that paid the price in the intervening years either stayed smaller than they needed to, raised on worse terms, or left. International VCs now invest in New Zealand companies many times a month rather than once a decade, which sounds like progress until you realise it means the most promising Kiwi firms are increasingly capitalised by offshore funds with offshore return expectations.
A functioning domestic crowdfunding channel at meaningful scale would give founders an alternative: raise from New Zealanders, stay accountable to New Zealanders, and build companies that stay here. The FMA’s own outcomes-focused regulatory approach should support exactly this kind of targeted, proportionate reform. The only question is whether the government moves fast enough for it to matter.
Sources
- Victoria University of Wellington: Equity Crowdfunding in New Zealand – Reviewing the Investment Cap (2018)
- NBR: Time for a shake-up of New Zealand’s equity crowdfunding rules
- Priority One / Enterprise Angels: Angel Investing – The crucial funding our innovation economy can’t lose (2026-02-18)
- BusinessDesk: Angel investment in startups is up, but spread more thinly
- EY New Zealand Private Capital Monitor 2025 (2025)
- NBR: Renewed push for KiwiSaver funds to pick up the VC baton
- NZ Herald: Blackbird partner says the Government made a mistake giving up on the $300m Elevate fund
- NZGCP Annual Report 2025 (2025)
- FMA / NZX: Growing New Zealand’s Capital Markets 2029 (2019)
- FMA Annual Report 2024/25 (2025)
- NBR: Cap raises herald new era for Kiwi companies