Business schools play catch-up on crowdfunding

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The Globe and Mail | DAINA LAWRENCE | March 22, 2016

Crowdfunding in Universities and schoolsSeveral years ago, Simon Parker, a professor of entrepreneurship at Ivey Business School, integrated crowdfunding into his curriculum as he recognized the need to impart this skill to the next generation of business leaders.

But it hasn’t been easy.

“I don’t think that Canadian universities or business schools are doing a particularly good job at covering crowdfunding,” Dr. Parker says, “but then again I don’t think the Canadian government is doing a very good job, either.”

Despite crowdfunding being the new normal in business, there is still the struggle to teach this subject because of its regulatory hang-ups in Canada. The challenges lie with the complexity of the crowdfunding environment in Canada – in particular, equity crowdfunding (when a group of people invests funds in an unlisted company in exchange for shares in that company), which is provincially regulated – unlike in the United States where it is under federal jurisdiction.

According to the National Crowdfunding Association of Canada, there are 72 crowdfunding platforms online throughout the country, including 12 for equity crowdfunding.

In January, the securities regulatory authorities in Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia adopted a regulation that will provide a regulatory framework for crowdfunding platforms and allow businesses that use them greater access to capital in these five provinces. But until now, this has not existed and some feel this is just the first step to get Canada on pace with the rest of the globe.

“The provinces have a responsibility for the national regulation,” explains Dr. Parker. “Some of them are working toward developing rules for crowdfunding sites. So there are crowdfunding sites in Canada, but at the moment there is still some uncertainty about equity crowdfunding.”  See recent regulatory developments in equity crowdfunding in Canada

It’s this uncertainty that Dr. Parker and his colleagues find perplexing when it comes to their teachings. On the one hand, crowdfunding is part of the entrepreneurial landscape around the world. On the other, it’s still a regulatory minefield in Canada.

So is it worth teaching?

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Elspeth Murray, professor of strategy and new ventures at Queen’s University’s Smith School of Business in Kingston, insists that lessons on crowdfunding are indispensable to future business leaders as it’s now a well-established part of not only the entrepreneurial world, but also the economy as a whole.

“This is a brand new, never-been-seen-before way of participating in the entrepreneurial economy,” she explains.

“It’s the sharing economy,” adds Dr. Murray. “It’s a whole bunch of things that kind of coalesce to make this a really important topic because it’s here to stay. So if you’re a business student, you need to understand this.”

But she also acknowledges that her teachings include many cautionary tales to students who might be considering crowdfunding as a way to generate startup capital for their business venture.

“We very much talk about the [provincial] regulatory environment as a barrier,” says Dr. Murray. “There have been massive lobby groups attempting to get the regulations changed because our entrepreneurs are disadvantaged, and the average citizen is ticked [off] because of our limited ways of participating in helping new ventures.”

From almost the first day of class, the topic of crowdfunding is incorporated into Mia Maki’s entrepreneurship course at the University of Victoria’s Gustavson School of Business.

“I think it has to be talked about because it’s part of the ever-changing landscape of financing available for entrepreneurs,” she explains.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more About Us or visit www.ncfacanada.org.

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