Canada’s Equity Crowdfunding Market Takes Tips From The UK

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By Robert DeFilippi of Fundrazr via

future world orderJust across the pond in the UK, another start up has used the power of equity crowdfunding to raise the much needed capital to expand their offerings. Humble Grape has surpassed their initial goal of £250,000 ($450,000 CAD) and is still collecting capital in excess of £330,000 ($615,000 CAD). That is a substantial amount of money for any new business to acquire, and just what Humble Grape needed to help with their expansion plans.

Humble Grape’s model for raising funds is a perfect case study for what other small companies should aspire to: establish some clientele, have revenue flowing, connect with suppliers, and understand why money is needed to expand. More importantly, founder James Dawson and director Cameron Gordon were able to convey their passion and experience through a short 2 minute video pitching their business to interested crowd investors. James conveys the passion he has for his company which drove him to deliver the initial shipments of wine on his motorcycle, to now entertaining impressive clients such as Deutsche Bank. A track record of success and a passion for the business, greatly differentiated Humble Grape from other crowdfunding campaigns and allowed them to easily make their funding goals.

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Another defining feature of this campaign was their use of equity crowdfunding and not the traditional rewards or donation model. Instead of giving away a few bottles of wine in return for a donation to their business, they instead gained shareholders who believe in their business model and invested in an idea they want to see grow. Equity crowdfunding is an idea whose time has come, where people from anywhere can invest and own new companies without going through the traditional brokers and dealers.

Humble Grape was able to choose between a rewards campaign and a equity campaign, because the laws in the UK and the rest of Europe are not as restrictive as in North America. Recent changes in the securities landscape of Canada will allow certain provinces to sell equity online through a portal without the usual financial reporting fees and regulation. It’s currently available but not yet used in Saskatchewan, and by autumn 2014 Canada’s three biggest provinces – B.C., Ontario, and Quebec – along with New Brunswick and Nova Scotia will have similar rules enacted. Its exciting, new, and opens up the market to 98% of Canadians who could not have participated previously. The restrictive market for investing is on the way out, and is being replaced with a flatter, more transparent, crowd based platform.

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