Category Archives: Voices

Federal budget keeps Canada’s fintech sector in the ‘valley of death’


The Globe and Mail | OpEd Michael King | March 1, 2018

Michael King is associate finance professor at Ivey Business School, University of Western Ontario.

In the world of startups, the period when entrepreneurs are spending cash to build out a new product or service but have no revenues is known as "the valley of death." The only way to survive is to find an investor who believes in the idea and is willing to finance it to production and to find customers fast. Almost as important as cash, however, is mentoring and strategic advice from someone who believes in the founders.

Currently, Canada's fintech industry is in the valley of death and is looking for mentoring, strategic advice and customers. The sector has been growing rapidly, investing in innovative products, but has yet to get traction. Canada's 2018 federal budget was a missed opportunity for Finance Minister Bill Morneau to voice his support for this innovative sector, to raise awareness among Canadians, to be a leading customer for these innovations, and to set a national strategy for this industry to succeed globally.

See:  NCFA Submission to Finance Canada (March 2018):  Urgent Need for Regulatory Change and Government Support

It is ironic, because the 2018 budget continues to focus on the right themes: promoting innovation; equipping Canadians with the skills to succeed in the digital economy; and creating economic growth and opportunity for all. Despite these lofty goals, the budget fails to mention the one sector that has the potential to achieve all three objectives: financial technologies or "fintech." In fact the word appears only three times in 367 pages, and then only in an annex.

Fintech innovations are affecting the daily financial activities of all Canadians – paying, saving, borrowing or investing. Whether you are paying a bill on your phone, transferring money abroad, taking out a loan online, comparing insurance using a website, or investing in an exchange-traded fund, Canadians will be seeing many improvements as fintech innovations are introduced by incumbents and new entrants alike. They will also likely be dealing with many non-traditional financial providers eager to bundle their product – whether it is social media, e-commerce, or part of the sharing economy – with unbundled financial products (e.g. a loan, an investment, or an insurance policy).See

The question no one is asking is whether these fintech innovations will be coming from a Canadian company or a foreign one.

While Canada has a highly educated work force, finance expertise, and talented entrepreneurs, it seems the Canadian government is indifferent whether these innovations are grown at home or imported from abroad. Canada's fintech ecosystem is not getting the support and attention directed at other crucial sectors, despite financial services accounting for 7 per cent of GDP and 4.4 per cent of all Canadian jobs. Of the government's five superclusters announced last month, financial services was a noteworthy gap.

What is behind this benign neglect for an important industry? It cannot be that Canadians are not hungry for simpler, less costly, and more responsive banking and financial services. The evidence from other countries is that fintech can enable higher savings for low-income individuals, access to capital for cash-starved small businesses, and better access to all financial services for underserved segments of the population. In many parts of their world, fintech innovations are democratizing access to finance and promoting growth from the bottom up.

See:  BCSC Consults Fintech Stakeholders and Requests for Comments (Closing April 3)

It may be that the government does not want to disrupt a stable financial system that has performed well over time. But that is not the attitude in countries such as Australia, where they view fintech as a valuable improvement and have committed to use government procurement to get startups on their feet.

Canada's growing fintech sector needs to hear that it is a valued part of the emerging digital economy, with great opportunities for jobs, investment, and growth. Britain, Australia, Hong Kong, Germany and Singapore are cheerleading their sectors. But as the Competition Bureau bluntly stated in a recent study, "Despite the attention that fintech is generating, Canada lags behind its international peers when it comes to fintech adoption."

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The National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding, alternative finance, fintech, P2P, ICO, and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, and networking opportunities to over 1600+ 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.  For more information, please visit:


Canadian Crowdfunding Industry Highlights Urgent Need for Changes


Locavesting | Staff Writer | March 16, 2018

Some Americans may envy Canada’s charming president and progressive politics, but when it comes to investment crowdfunding, the two countries are in the same boat.

In an appeal to government regulators this week, Canadian crowdfunding and financial tech advocates called out an “urgent need for regulatory changes and government support” for Canada’s entrepreneurial and capital raising ecosystem. That includes streamlining the country’s crowdfunding regulations and educating the public about the laws.

“Entrepreneurs are reluctant to start up in Canada due to the high costs (relative to a small financing), and significant ongoing regulatory burdens. Investors are inhibited by caps on investment and limited education about  the benefits and downside risks of crowdfunding and other exempt financings. This pushes many talented entrepreneurs and investors to overseas jurisdictions that better understand (and support) innovation and the economic potential of start-ups and small businesses,” writes the National Crowdfunding & FinTech Association (NCFA), a nonprofit Canadian trade group.

In Canada, online capital-raising rules vary by province, and efforts to “harmonize” the laws have fallen short.

The U.S. is in a slightly better position. The U.S. crowdfunding industry falls under a single federal framework, the 2012 JOBS Act.  However, 34 states have passed intrastate laws that can vary greatly.

But U.S. complaints are similar in other regards, including the need to improve burdensome regulations and educate the public about the new laws.

Of particular note, the NCFA decried the lack of support and incentives for education.

“Introducing new requirements/exemptions without a robust ongoing educational program is like asking new drivers to follow a road that contains no ‘signs’, without maps,” writes the NCFA.

In a 2017 survey by the NCFA, over 70% of respondents said more education was required to attract more investors to crowdfunding. A lack of awareness and education around crowdfunding laws is frequently cited as the number one challenge in the U.S. as well.

Data collection and analysis is also lacking, according to the NCFA.

Encouraging Investors

One area where Canada stands out may be in offering tax incentives for investors, although not specifically in conjunction with crowdfunding. The report doesn’t mention it, but some Canadian provinces, such as New Brunswick, have long offered tax incentives for local investors that have been held up as a model for the U.S.

Still, those efforts pale compared to the UK, where investment crowdfunding is more mature and investors may easily invest in local companies and startups via tax-advantaged retirement accounts. In the U.S., that requires setting up a separate (and cumbersome) self-directed IRA.

The NCFA warns that, without action, Canada risks falling further behind in global competitiveness and financial innovation. They cite an Ernst & Young “Fintech Adoption Index” that put Canada near the bottom of global fintech adoption rates, at just 18 percent. The U.S. clocked in at 33%, the average adoption rate, trailing countries such as Australia (37%), the UK (42%), India (52%) and China (69%).

The NCFA concludes with recommendations, including streamlining the regulations and potentially adopting British Columbia’s more preferable framework. It also advocated for regulatory “sandboxes” that allow for controlled financial experimentation—an idea that has been implemented in the U.K. and proposed in the U.S.

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NCFA Canada’s submission to Finance Canada (March 2018): Urgent Need for Regulatory Change and Government Support


NCFA Canada | March 15, 2018

On Tuesday, March 13, 2018, the National Crowdfunding & Fintech Association participated on a call with Finance Canada in Ottawa to discuss it's latest submission calling for an urgent need for regulatory changes and government support to ensure the Canadian fintech sector is not being held back and remains competitive with international comparators such as in the UK and US.  Below are the highlights of the submission that can be viewed/downloaded in full at the bottom of this post.

We'd like to thank Robin Ford, NCFA Advisor, Regulations and Governance for leading a group effort by the following participating NCFA members (in alphabetical order):

Alan Wunsche, Blockchain Canada
Alixe Cormick, Venture Law Corp
Amar Nijjar, R2 Capital / Investments
Beverly Brooks, Brooks Communications
Brad Kerr, FundingNomad
Cato Pastoll, LendingLoop
Craig Asano, Founder/Director, NCFA
Daryl Hatton, FundRazr / Director, NCFA
Douglas Cumming, Finance Professor, York University
Hitesh Rathod, NexusCrowd
Jason Saltzman, Gowling Canada LLP
Marcel Schroder, Managing Director, Vaultcircle (Lendified)
Marcus New, InvestX
Marty Gunderson, Director, NCFA
Peter-Paul Van Hoeken, FrontFundr
Richard Remillard, RCG Group / Director, NCFA
Robin Ford, former Head of Dept UK FSA, former Executive Commissioner BCSC, Consultant
Rubsun Ho/Sandy Hershaw, Crowdmatrix


1. OVERVIEW: Crowdfunding & Fintech are being held back in Canada

Canada’s crowdfunding and fintech “ecosystem” should be competitive, be in line with global trends, and enable early stage entrepreneurs to access smaller amounts of capital (ie, < $5 million) at a reasonable cost. Unfortunately it is not. There is a‘funding gap’ in the market as many smaller companies find it very challenging to raise debt or equity financing in Canada. This means fewer innovative start-ups, fewer opportunities for investors, and constraints on economic growth (and jobs).

The National Crowdfunding & Fintech Association of Canada (NCFA) has conducted numerous stakeholder consultations which overwhelmingly tell us that the regulatory requirements are overly prescriptive, complex, and burdensome (costly). The capital markets regulators in Canada have attempted to address the market problems within their jurisdictions, but so far without much success.

Canada is falling behind international comparators such as the United Kingdom and the United States. Entrepreneurs are reluctant to start up in Canada due to the high costs (relative to a small financing), and significant ongoing regulatory burdens. Investors are inhibited by eg caps on investment and limited education about  the  benefits  and  downside  risks  of  crowdfunding  and  other  exempt financings. This pushes many talented entrepreneurs and investors to overseas jurisdictions that better understand (and support) innovation and the economic potential of start-ups and small businesses.

The NCFA is very concerned about this and has strongly encouraged the BCSC and OSC to work smarter (and harder) to streamline regulation across the country, and to reduce undue burdens (that are not justified by the risks).

The NCFA now asks the federal government to work with the provinces and regulators to provide the required strategic direction and leadership needed to enhance Canada’s competitiveness.



The benefits of crowdfunding are broadly accepted and frequently described, eg - crowdfunding-2/#3fd5ab4c2c5e.

The same is true of fintech, eg - capturing-the-benefits-avoiding-the-risks/.

If the NCFA recommendations in this submission were to be implemented, the experience of other jurisdictions makes clear that more capital would be raised, especially for under-serviced sectors (eg, women and minority groups, including First Nations and rural areas). Investors would also have increased confidence and more freedom to invest as they choose.

We have a lot of tech and innovation talent in Canada. As the Competition Bureau has pointed out (Dec 2017 -, a more flexible approach to regulation and adequate government support would provide significant economic benefits by freeing entrepreneurship. It would also help to keep our entrepreneurs in Canada (along with the related jobs), boost GDP (especially by improving productivity), and encourage the commercialization of new products and services generally.



As the leading and only dedicated crowdfunding and fintech association in Canada, the NCFA has consulted numerous registrants, industry experts, and practitioners in the sector about the most pressing challenges.  They say:

  1. Investment-based crowdfunding requirements are far from internationally competitive with respect to raising non-bank funding.
  2. Regulatory requirements are overly prescriptive with a one size fits all approach (versus risk-based) that is not working.
  3. Regulatory regimes in Canada are not harmonized and are overly complex which adds significantly to the costs of start-up and ongoing compliance.
  4. Lack of co-ordinated governmental incentives and support for innovation and for education and awareness puts Canada at a disadvantage that our competitors are happy to exploit.


A. Overly prescriptive requirements

Many entrepreneurs been discouraged by high legal fees, onerous reporting requirements, and other burdens. While entry into the market may be possible, entrepreneurs are also inhibited by ongoing costs of compliance and high hurdles for future financings that will limit their ability to scale up.

For example, only a small number of issuers have used online platforms to raise capital under the Accredited Investor or Offering Memorandum Exemptions in Ontario. While the Offering Memorandum Exemption is gaining some traction and is used by several NCFA member portals, it is primarily aimed at companies wishing to raise at least $250,000 (due to the costs, for example, of preparing the necessary legal and financial documentation).  Most early stage companies seeking to  raise  smaller  amounts  of  capital  cannot  realistically  use  the  OM  (or  the Integrated Crowdfunding Exemption MI 45-108 due to similarly high costs).

These exemptions are also inadequate for most marketplace lending platforms. For example, they do not allow the multi-party participation of public, private and government blended funding models which have developed in the UK and elsewhere, or membership marketplace lending models. (See Appendix 10:  P2P Lending.)

BC and some other jurisdictions have a ‘lighter’ set of crowdfunding requirements (eg, the ‘Start-up Crowdfunding Registration and Prospectus Exemptions MN 45-316 that allow small firms to raise up to $250,000 per offering (twice a year), with participation from other provinces). If there is not be a move towards a risk based approach, then the NCFA supports BC’s regime and proposes that other jurisdictions at least allow BC offers to be distributed across Canada under a mutual   recognition   system.   (NCFA   was   pleased   to   see   BCSC’s   recent announcement   of   changes   to   the   Startup   Exemptions   (BCI   45-535)   - up_crowdfunding_exemption_will_increase_access_to_capital_for_B_C    issuers)

For more recommendations to streamline regulation see Appendix 11.

The NCFA encourages regulators not only to adopt a more risk-based approach, but also to improve the measurement of the cost of a proposed regulatory solution against its benefits. Detailed or prescriptive controls should only be imposed when clearly justified. Market problems should not be “resolved” by additional requirements unless demonstrated benefits exceed costs. (See Appendices 5 and 6

Prohibitions on Advertising and Solicitation’ and ‘Frequency of Reporting Requirements’ for a high-level analysis of two requirements where we conclude that the costs far outweighs any benefit, and Appendix 7 ‘Regulatory approach’.)


B. Regulation is not harmonized and is overly complex

There  are  currently  three  versions  of  crowdfunding  specific  requirements  in Canada that form a patchwork that varies with respect to offering documentation, ongoing   disclosure   requirements,   capital   raising   and   investor   limits,   and advertising. These differences make it more costly for early stage companies, most of whom want to raise funds and do business in more than one jurisdiction (with additional costs for issuers of approximately $5,000 - $20,000 in legal fees alone).

The differences among the regulatory systems are outlined in Appendix 1. The table illustrates how complex and varied the requirements are, causing confusion and frustration for all market participants. Appendix 2 shows that differences exist even among jurisdictions participating in the same instrument, in this case MI 45-108.


C. Lack of incentives and support for education and innovation

Introducing new requirements/exemptions without a robust ongoing educational program is like asking new drivers to follow a road that contains no ‘signs’, without maps.  To increase the use of the new financing tools, in addition to the regulatory changes the NCFA proposes in this submission, many more businesses and individuals need to be educated about the opportunities and threats for both entrepreneurs and investors.

We have selected some insights from the NCFA’s annual 2017 Alternative Finance Crowdfunding survey of 170 responders (Jun-Jul 2017) including investment platforms, companies seeking capital, and a wide range of investors (including VC/PE and institutional investors):   (See: Appendix 3  NCFA Selected Survey Results Charts)

  • When asked ‘What do you think is needed to attract more investors to the Canadian  alternative  finance  crowdfunding  markets?”    The  number  one (70% of the responders) answer was “More education”.
  • When  issuers  were  asked  “Has  your  company  ever  raised  capital  via alternative finance crowdfunding markets before?” the overwhelming majority (approximately 90%) responded ‘No’.
  • When asked why not, issuers’ number one reason (over 55%) was that they were ‘Unaware of how it works’.

While regulators have provided dedicated web pages to help potential investors and issuers better understand the capital markets, the information is limited. According  to  a  recently  published  Ernst  &  Young  “Fintech  Adoption  Index” survey, Canada has one of the lowest fintech adoption rates in the world and a central reason for this is lack of awareness. Over 70% of the respondents thought that more education was required to attract more investors to crowdfunding and that the regulators should publish more market analyses.

Data collection and analysis is poor in Canada. In contrast, the Securities and Exchange Commission (SEC) recently published an extensive whitepaper on Title III Regulation crowdfunding activity titled ‘U.S. Securities-based Crowdfunding under Title III of the JOBS Act’ that reviews offering activity, characteristics, geographic distribution and regulated platforms performance, characteristics and compensation rates.

It is crucial that data collection and analysis be improved in Canada (in collaboration with the private sector) so that we can better understand the markets and pinpoint problem areas (to enable evidence-based decisions).

Finally, we were pleased to see the announcement of the new federal program Innovative Solutions Canada as well as the support in Budget 2018, building on Budget 2017. These are steps in the right direction (and we are aware of some older federal programs). But Canada still needs a comprehensive innovation strategy and an integrated program of incentives and support. Governments, regulators, and the private sector need to work together more strategically. Other jurisdictions like the UK, Singapore, and Hong Kong are well ahead of us.



A. Work harder to harmonize and reduce unjustified regulatory burden

Prescriptive and complex regulation is simply inappropriate in a highly innovative and fast paced  digital  space.  Moreover,  businesses  cannot  be  as  nimble  and responsive to market demand.

We acknowledge that a change to a more risk based and principles based approach is not easy. Indeed it would require a profound change in regulatory culture and a significant and long term commitment from Ministers and regulatory boards and senior management. But short of that, there is much that can be done. The NCFA has made specific recommendations for regulatory change. (See Appendix 11.) (Regtech must also be part of a change of approach, but we do not discuss that here.)

B. Governments to support regulatory change

The  NCFA  strongly  supports  CSA  initiatives  such  as  “sandboxes” and  cross- border agreements (such as the recently announced agreement between some Canadian  regulators  and  the  French  AMF  FinTech,  Innovation  and Competitiveness Division). But it is not enough. (In the UK, the FCA is now pushing for sandbox improvements globally.)

There is a crucial role here for governments, especially the federal government, to champion innovation, to agree a fintech or innovation strategy with the provinces, to use already proven tax and other incentives, and to work with the private sector to ensure adequate data collection and analysis. The profound change in regulatory approach in the UK starting in 1997 could not have happened without the strategic planning and leadership of Number 10.

More government resources and support for innovation and education

While educational conferences are in high demand and markets are slowly gaining traction in Canada, the sector needs more government support to encourage and enable more portals  and  participants  to  start-up,  ‘scale  up’,  and  operate  more efficiently.    There  is  a  large  knowledge  gap  due  to  the  real  (or  perceived) complexities and burdens involved in putting together an online financing round. Businesses and investors need to be better educated about the options and the available  support  facilities  and  incentives.  Education  is  an  investment  by governments,  working  with  the  private  sector,  that  will  generate  more  capital investment and jobs, as well as making potential investors more risk aware.  (See Appendix   4:       Private-public   growth   model   for   the   alternative   finance crowdfunding industry.)



Governments play an essential role in facilitating and encouraging innovation and entrepreneurship. While one might now add to it, a wide ranging 2010 paper by PWC provides a good overview of how this can be done -   The   report   concludes:   “Countries  that   understand   their   particular economic profile, and design the right strategy to suit that profile, stand to raise the odds of success in fostering innovation.”


The NCFA urges the federal and provincial governments, as well as the provincial and territorial securities regulators, to work together:

  • to reduce regulatory burden, to champion innovation,
  • to make good use of proven tax and other incentives, and
  • to work with the private sector to ensure adequate data collection and analysis, as well as education and awareness.

If not, we will fall further behind.

The National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding, alternative finance, fintech, P2P, ICO, and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, and networking opportunities to over 1600+ 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.  For more information, please visit:


Should we let the crowd fund Canadian science if no one else will?


CBCnews | Kelly Crowe | Jan 20, 2018

Scientific crowdfunding is springing up all over the world. It's a departure from the way science is traditionally funded, with public sector institutions awarding research money using rigorous evaluation by experts — a process known as peer review.

But those public funding sources are shrinking. A national report last April warned that Canadian research is seriously underfunded and called on Ottawa to dramatically increase support for basic science.

In the meantime, scientists, especially young researchers, are struggling to launch their careers.  And that's a gap Eric Fisher is hoping to fill, through his made-in-Canada science crowdfunding platform called Labfundr.

See: Sign of the times: Crowdfunding for scientific research

"We have these really major questions and challenges facing society and there's not always the funding available to make the incremental steps forward," said Fisher. He has a Ph.D. in biochemistry, but instead of doing his own research he's decided to support other scientists and run a business at the same time. Like other crowdfunding platforms, Labfundr takes a percentage of the funds raised in successful campaigns.

The idea of going to the crowd to fund science makes Jeremy Snyder nervous. He's a medical ethicist at Simon Fraser University and he's researching the ethics of using crowdfunding to finance medical treatments. Snyder is concerned about a lack of oversight and peer review as science crowdfunding takes off.

"The Labfundr people I'm sure are trying to do a good thing," he said, "and I think there are probably ways it can be done really well, but I think there's also a lot of danger of turning it into a popularity contest, hijacking public funding and really hyping new treatments that aren't well supported by the scientific community and providing an alternate way of funding those."

See also: Crowdfunding the Canadian Knowledge Economy

Jim Woodgett, director of research at the Lunenfeld-Tanenbaum Research Institute, applauds the initiative but is also concerned about the lack of oversight and peer review.

"How do you identify what is the most likely to be useful or most likely to be scientifically valid? Peer review does provide some quality control but it also sets a pretty high bar, whereas crowdfunding has, in essence, no bar."

Fisher said Labfundr requires researchers to be affiliated with academic institutions.

"We've launched one project to date," said Fisher. "[We've had] quite a few leads and a lot of interest but it's been a challenge to get projects launched."

Crowdfunding science made headlines recently when 1,700 online donors gave money to a campaign to study whether a dimming star is being caused by aliens. A crowdfunding campaign raised more than $100,000, which the researchers used to book time on telescopes. So far the data suggests the dimming light is being caused by space dust — not aliens.

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The National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a national non-profit actively engaged with social and investment crowdfunding, alternative finance, fintech, peer-to-peer (P2P), initial coin offerings (ICO), and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, networking opportunities and services to thousands of community members and works closely with industry, government, academia and eco-system partners and affiliates to create a vibrant and innovative fintech and online financing industry in Canada.  For more information, please visit:


Self-regulation: Is it time?


NCFA Canada | Robin Ford, Advisory Group | 12 Jan 2018


The problem

A.  NCFA’s objective for regulation is that it should cost-effectively support (or not unduly inhibit) a competitive and vibrant crowdfunding regime and fintech industry in Canada that provides enhanced access to capital and investment opportunities and is worthy of  investor confidence.

B.  However well-intentioned, the current regulatory regime is inhibiting innovation and competition in Canada (although other factors are also in play). Please see the most recent NCFA submission to Ontario Ministry of Finance: ‘Urgent Need for Regulatory Change’ or the Competition Bureau's market study report titled ‘Advancing the Dialogue on the Future of Financial Services’.

C.  Detailed, prescriptive regimes can cause harm by (among other things): (1) not providing the right incentives for businesses to take responsibility for managing themselves well and treating customers fairly, and (2) distracting senior management and boards from focusing on essential governance improvements, strategic planning, policy and process improvements, fundraising, marketing, etc.

D.  NCFA has argued that the regulatory environment in Canada must change so fintechs, and start-ups generally, may enter the market, grow, and thrive. But supportive regulation is not enough.   Businesses must do more to bridge the gap between starting up, scaling up and maturing.  This is especially true if regulation does not focus on the right things.

E.  So - what can platforms and issuers (and prospective issuers) do, besides continuing to lobby for regulatory change? Answer - quite a bit. This brief post aims to start a conversation about self-regulation and the “right things”.



  1. Self-regulation can be defined as: “regulating (i.e, controlling or governing conduct) without intervention from external bodies”. Self-regulation includes written or unwritten internal policies and procedures (specific to a business) and may extend to regulation by an IIROC-type self-regulatory organization (Investment Industry Regulatory Organization of Canada).

  1. While the NCFA has no particular outcome in mind at this stage, we think most would agree that:

(1) as industries or businesses grow and mature, self-regulation becomes more important and must itself mature;

(2) good self-regulation can enhance the profitability and growth of businesses or sectors by reassuring and educating investors and clients/customers (building knowledge and trust), by improving and aligning business processes (for greater cost effectiveness), by helping to attract and keep employees and so on.


  1. There is another benefit.

“As regulators start to develop their own measures for setting and enforcing cultural norms there is a clear advantage for boards who can get ahead of this trend and demonstrate leadership in setting a culture that is strategically effective as well as meeting the lowest common denominator of regulatory acceptability. Companies with strong cultures that support their strategic aims will outperform those with weak or unaligned cultures.” -

Appropriate and effective self-regulation can also help to persuade an external regulator that the businesses being regulated pose a lower risk to its regulatory objectives. If so, supervision may be less intense and specific requirements may be less constraining. It can also help to shift the regulatory approach to one that is more principles based and outcomes focused, and to matters (the “right things”) that are arguably more important for the achievement of regulatory objectives than many of the prescriptive requirements that businesses in Canada now face (and not just from capital markets regulators).

See:  Fintech Regulation: Achieving the right balance to foster innovation

What outcomes should businesses be aiming for? There are several questions to ask:

(1) Our starting point is the UK Financial Conduct Authority's principles for businesses. Capital markets regulators in Canada tend not to require or focus on  these principles, but for UK regulators they are almost always the first priority.  Indeed, the regulatory approach of the FCA (and the FSA before it) has ensured that the principles have become not only the priority  for the capital markets regulators, but also for the regulated firms.

In the UK, regulated firms must be able to demonstrate to the FCA at all times that they meet the principles for businesses, which are:

  1. Integrity: a firm must conduct its business with integrity.
  2. Skill, care and diligence: a firm must conduct its business with due skill, care and diligence.
  3. Management and control: a firm must take reasonable care to organize and control its affairs responsibly and effectively, with adequate risk management systems [and, in particular - robust governance arrangements, a skilled and knowledgeable staff, and adequate record-keeping].
  4. Financial prudence: a firm must maintain adequate financial resources.
  5. Market conduct: a firm must observe proper standards of market conduct.
  6. Customers’ interests: a firm must pay due regard to the interests of its customers and treat them fairly.
  7. Communications with clients: a firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading.
  8. Conflicts of interest: a firm must manage conflicts of interest fairly, both between itself and its customers and between a customer and another client.
  9. Customers relationships of trust: a firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely on its judgment.
  10. Clients’ assets: a firm must arrange adequate protection for clients’ assets when it is responsible for them.
  11. Relations with regulators: a firm must deal with its regulators in an open and cooperative way, and must disclose to the appropriate regulator any thing relating to the firm of which that regulator would reasonably expect notice.


We suggest that every business, regardless of regulatory requirements, should be able to make a clear, positive statement to its stakeholders about what it is doing to comply with these principles. 

Since regulation should be proportionate and reflect the nature, scale and complexity of the business (and the risk the activity may pose to consumers), each business will comply with the principles in a different way and will ramp up or change its internal standards and compliance as it grows and matures. At the same time, self-regulation should align with (and perhaps support) external regulation.

See:  The ICO Governance Deficit

(2) Better self-regulation for which sectors in particular? - portals, fintech, DLT, cryptocurrencies, start-ups, ICOs? What are the areas in greatest need of improved self-regulation (for either business improvement or greater trust or both)?

(3) What principles for businesses matter the most right now? For example, should we focus on standards of market conduct?  If so, then (as a first step) a code of market conduct might be suitable. If so, should it be an industry code of conduct that businesses can sign up to? How should it be enforced? Would the code of conduct  be worth the paper it is written on if there is no independent and transparent supervision?  Or would regular reporting by the businesses using the code be sufficient to persuade stakeholders that it is adding value?

(4) How should we take this discussion forward (if at all)?  What role could NCFA play - leader, issuer of guidance, educator?   What other organizations should be involved with this collaborative domestic/- global community effort?

We’d love to hear your views!

Please let us know what you think by email to by January 19, 2018.


The National Crowdfunding Association of Canada (NCFA Canada) is a national non-profit actively engaged with social and investment crowdfunding, alternative finance, fintech, peer-to-peer (P2P), initial coin offerings (ICO), and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, networking opportunities and services to thousands of community members and works closely with industry, government, academia and eco-system partners and affiliates to create a vibrant and innovative fintech and online financing industry in Canada.  For more information, please visit:


How Crowdfunding Has Influenced Start-Ups


HuffingtonPost | By Julee Morrison, Contributor | Oct. 2, 2017

You have a great idea that you would like to bring to the market. However, you have little to no capital in kick-starting product development. Furthermore, you don’t really have the business acumen and the research and development needed to make a solid business presentation to a group of investors.

So, how do you go about finding the seed funding you need to start turning your idea into a reality? Many entrepreneurs in recent years have turned to crowdfunding as a way to reach a large audience to fund product ideas and business models.

What Is Crowdfunding?

Crowdfunding is an alternative way for businesses, and especially start-ups, to source capital for a new venture from a number of people online, primarily through connecting investors and entrepreneurs on crowdfunding websites and social media.

This differs from traditional ways of collecting capital when entrepreneurs pitch a business plan to a limited number of wealthy businessmen or companies. Crowdfunding allows someone to pitch their business plan to a much larger pool of venture capitalists, instead of the traditional players.

See: A Guide to Building an Audience for Crowdfunding

How It Works

Crowdfunding websites such as Kickstarter and Indiegogo act as platforms for entrepreneurs to present their business ideas and products in front of a large audience of potential investors. These websites are then able to make a profit by taking a percentage of the funds raised for each idea.

An entrepreneur signs up to one of these websites to start a campaign, explain an idea or product, which is then spread mainly through social media platforms such as Facebook and Twitter to gain the attention of potential investors.

There is no limit to the types of products that can be presented on these crowdfunding platforms, with ideas ranging from an alternative to Apple’s smartwatch to a new potato salad recipe.

See: What 10,000 Kickstarter projects reveal about Canads entrepreneurs

Types Of Crowdfunding

There are three types of crowdfunding: donation or reward, debt, and equity. In donation or reward crowdfunding, people chose to invest in an idea or a person without an expectation to receive anything tangible in return.

What they might receive in reward crowdfunding are acknowledgements in a book, free gifts, tickets to a concert and so on. Crowdfunding websites such as Kickstart and Indigogo fall under this category.

In debt crowdfunding, also known as peer-to-peer lending, investors can recoup their money with interest as with traditional investments. The only difference is that traditional lenders such as banks are not involved. Platforms such as Prosper, Funding Circle, and Lending Club offer debt crowdfunding.

Another category of crowdfunding is equity crowdfunding in which investors receive equity in return. Equity can come in the form of shares or a stake in the company, project, or venture. Similar to other forms of equity, the value of the company fluctuates depending on how successful it is. Examples of portals offering such services are OfferBoard, CircleUp, and OurCrowd.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both investment and social crowdfunding, blockchain ICO, alternative finance, fintech, P2P and online investing stakeholders across the country.  NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a vibrant and innovative online financing industry in Canada.  Learn more About Us or visit


5 Deal-Breaking Mistakes to Avoid When Pitching for Money


NCFA Guest post | Gloria Kopp | Sep 14, 2017

When you're trying to fund a project with invested money, you need to ensure you're doing everything you can to enlist the most help from the most donors so that your project gets the funding it needs and can proceed on time as planned. Deficiencies in funding can significantly impact how quickly something is completed, and a lack of funding can totally kill projects in some cases. When you steer clear of these deal-breaking mistakes in your fundraising appeal letter, you'll give yourself the best chances of reaching your fundraising goals.

Not naming your contributors as the difference-makers

You may be organizing the project, but the backers (donors or investors) are the ones who are financing it and making it possible, so it's essential that you acknowledge that in your letter. If they're regular contributors, make sure they know you've noticed that. Something as simple as thanking them for their support since the (specific) day they made their first contribution can let them know that you're grateful for their help. You'll also want to make them aware of what their current donation will be put towards. When you let them know what they've already helped to accomplish and what they're currently helping with, they are instilled with a sense of fulfillment and pride.

“Emphasis the 'you' in your letter – leave yourself and what your own organization's part out of it for the most part. Of course, without financial contributions, your fundraising project would go nowhere, so they truly are the difference-makers” – says Fred Davis, an Operation Manager at State of Writing.

Using fear to sell them on contributing

Don't focus on the negative, or what will happen if you aren't able to pull together the funding for your project. If you start doing that, your potential donors could be hesitant about contributing because they may not have confidence in you to reach those goals. Instead, focus on all of the good that will come once the target fundraising amount has been reached – write your letter with the tone that reaching your goal is not out of reach.

See:  Crowdsourcing – A Powerful Marketing Tool for Startups

Painting a bleak picture of a negative outcome does nothing to inspire donors to join your cause. You want people to feel excited about the possibilities that lie ahead, not scared about what might happen.

Not getting to the point

If you're asking someone to contribute money to your cause, there's a good chance that others are doing the same. For this reason, you'll want to keep your fundraising appeal letter short and to the point, because they typically won't have the time to dedicate to reading a lengthy letter. James Atchison, a PR Manager and a contributing author at Huffingtonpost shares the opinion:

“Not only that, but they may lose interest in it before they reach the end. Be mindful of the busy schedules your contributors may be keeping by sending them a short letter that gets right to the heart of the matter.”

Assuming familiarity

Of course, you yourself should be well versed on the topic you're asking to be funded. But, there's no reason why your contributors should know anything about it, especially not from the first letter they receive. Assuming a certain level of familiarity with an issue or project can lead to miscommunication and information just going over your donor's heads. In a fundraising letter to build a new youth center, you probably don't want to introduce the concept by talking about the specifics of the building. You'll want to instead talk briefly about the need for the youth center to begin with. Specifics are great, but not to someone who has no knowledge of the cause to begin with. “To start with, the basics are great, and if there's interest you can provide more information after. The goal is to get them interested and excited, not to leave them scratching their heads and dismissing you” – comments Valentina Tighe, an Outreach Manager at Academized.

Leaving out the essentials

A well composed fundraising letter has four key components. Having all of these in your letter helps increase your chances of seeing success in your fundraising efforts. These include a single, concise message; facts that can support anything you've said; an inspirational factor that drives donors to get involved; and a clear and straightforward call to action.

See:  Hacking the Startup Fundraising Matrix

A good fundraising letter versus a bad one can have an enormous impact on the financing your project ultimately receives. Avoid these deal-breaking mistakes and help boost your chances of fundraising success.

"Gloria Kopp is an elearning consultant and a content manager at Big Assignments. She loves sharing her professional advice in her posts at HuffingtonPost and Paper Fellows blog. Besides, Gloria writes Studydemic educational blog for students and educators."

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding, alternative finance, fintech, P2P and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, and networking opportunities to over 1600+ 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 at