Category Archives: Equity Crowdfunding

NACO hopes its Common Docs will standardize angel investment term sheets in Canada

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Betakit | | Apr 13, 2017

NACO common docs

On Tuesday, the National Angel Capital Organization gathered 100 angel investors and partners in Toronto to mark the launch of NACO’s Common Docs.

The organization has spent the past three months working with Canadian angel investors and founders on standard document templates, meant to act as a guideline, for early-stage startup investments. Open Angels’ Boris Mann and E-Fund’s Peter Dorsman acted as project leads working with Canada’s startup ecosystem.

“There’s all kinds of stories — and I’m sure each of you have your own stories — about the amount of friction and confusion that exists sometimes in deals and the way that they’re done,” NACO CEO Yuri Navarro said during the launch event. “And the sad side effects of that…just the way you structure a deal can actually have a significant, negative impact on a company in the future.”

Navarro said that the goal of Common Docs is to reduce the friction in negotiating deals by having the docs as a starting point, and give both founders and funders a better way to understand how deals are structured.

“This is really a matter of raising the literacy around this stuff from a Canadian perspective. There actually is no central Canadian repository of really anything,” said Mann. “The other thing that we sought to do was answer the question is, what is common? That was definitely something that was starting to come from the NACO membership, even some stories of saying

‘we lost a deal because we were told our terms weren’t market.’ What is common? What’s market?”

In a panel with founders and investors during the event, the speakers touched on some of the pain points that having a central resource could solve.

See:  Angel investing was always male-dominated. That’s finally changing

When it comes to getting more people interested in angel investing, Zoom.ai founder Roy Pereira said it’s important to get more young founders involved. “I think we have to get some of the younger people who had a few exits, or one exit at least, to get more involved in angel groups and crowdfunding,” said Pereira. “I find they’re not interested or they don’t see themselves in these groups. So I think there may be a disconnect, And they’re not investing as much as they could because they don’t see themselves in the community.”

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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 1500+ 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 www.ncfacanada.org.

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SEC Updates JOBS Act Amendments Including Reg CF Funding Cap

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Crowdfund Insider | | Apr 5, 2017

Reg CF

The SEC has announced it has adopted amendments to increase the amount of money companies may raise under Reg CF or retail crowdfunding. Initially, Reg CF capped the amount allowable for issuers to $1 million. The SEC has adjusted the amount for inflation and increased the funding limit to $1.07 million. The threshold for investor limits was correspondingly increased in a similar fashion.

While the limit on Reg CF was slightly increased there is a movement in Congress seeking to raise the cap to perhaps $10 million, thus making the exemption more palatable for a wider range of issuers.

The funding cap, along with other limitations, have hobbled the utilization of the Reg CF as many issuers continue to utilize Reg D as it is less costly for companies raising money.

The SEC also approved amendments that adjust for inflation a threshold used to determine eligibility for benefits offered to “emerging growth companies” (EGCs) under the JOBS Act.

“Regular updates to the JOBS Act, as prescribed by Congress, ensure that the entrepreneurs and investors who benefit from crowdfunding will continue to do so,” commented SEC Acting Chairman Michael S. Piwowar. “Under these amendments, the JOBS Act can continue to create jobs and investment opportunities for the general public.”

The SEC is required to make inflation adjustments to certain JOBS Act rules at least once every five years after it was enacted on April 5, 2012.  In addition to the inflation adjustments, the SEC adopted technical amendments to conform several rules and forms to amendments made to the Securities Act of 1933and the Securities Exchange Act of 1934 by Title I of the JOBS Act.

The Commission approved the new thresholds March 31. They will become effective when they are published in the Federal Register.

Section 101 of the JOBS Act added new Securities Act Section 2(a)(19) and Exchange Act Section 3(a)(80) to define the term “emerging growth company” or EGC.  Pursuant to those sections, every five years the SEC is directed to index the annual gross revenue amount used to determine EGC status to inflation to reflect the change in the Consumer Price Index for All Urban Consumers (“CPI-U”) published by the Bureau of Labor Statistics. 

To carry out this statutory directive, the SEC has adopted amendments to Securities Act Rule 405 and Exchange Act Rule 12b-2 to include a definition for EGC that reflects an inflation-adjusted annual gross revenue threshold. 

See:  Katipult Secures Capital Partner for 2017 Growth

The JOBS Act also added new Securities Act Section 4(a)(6), which provides an exemption from the registration requirements of Section 5 under the Securities Act for certain crowdfunding transactions.  In October 2015, the SEC promulgated Reg CF to implement that exemption.  Sections 4(a)(6) and 4A of the Securities Act set forth dollar amounts used in connection with the crowdfunding exemption, and Section 4A(h)(1) states that such dollar amounts shall be adjusted by the SEC not less frequently than once every five years to reflect the change in the CPI-U published by the BLS.  The SEC has adopted amendments to Rules 100 and 201(t) of Regulation Crowdfunding and Securities Act Form C to reflect the required inflation adjustments.

Additionally, Sections 102 and 103 of the JOBS Act provided several exemptions from a number of disclosure, shareholder voting, and other regulatory requirements for any issuer that qualifies as an EGC. The exemptions reduce the financial disclosures an EGC is required to provide in public offering registration statements and relieve an EGC from conducting advisory votes on executive compensation, as well as from a number of accounting and disclosure requirements. 

The SEC said the regulatory relief provided under Sections 102 and 103 of the JOBS Act was self-executing and became effective once the JOBS Act was signed into law.  The technical amendments that the SEC is adopting conform several rules and forms to reflect these JOBS Act statutory changes.

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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 1500+ 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 www.ncfacanada.org.

 

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Wattpad, Wealthsimple and Overbond Join The Upside Foundation’s 150×150 Challenge to Canadian Startups to Give Back

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Upside Foundation | April 4, 2017

Upside foundation

Over 75 Canadian startups have already pledged to donate equity to charity

TORONTO, ON, April 4, 2017 — Today The Upside Foundation, a national charity that makes it easy for early-stage or high-growth Canadian companies to give back in a meaningful way, announced the launch of their campaign, 150×150: Turn Equity Into Charity. The campaign aims to grow the number of companies who have pledged to give back to 150, as we celebrate Canada’s 150th birthday. Canadian startups who make the pledge will donate a small portion of their equity to The Upside Foundation (typically in the form of stock options), which are converted to cash upon a liquidity event and donated to the charity of the company’s choosing. The Upside Foundation is also announcing several prominent Canadian startups who have taken the Upside pledge, including Wattpad, the Toronto-based entertainment company for original stories, as the first company to kick-off the 150×150 challenge.

“The Upside Foundation provides an easy solution for both early-stage startups and high-growth companies who want to give back but don’t necessarily have the time or money,” said Rob Antoniades, Board Chair and Co-founder of The Upside Foundation. “Through this national campaign, we hope to empower 150 Canadian startups to take the pledge to donate a portion of their equity and help build a stronger future for Canada.”

The Upside Foundation is partnered with Pledge 1%, a global movement founded by the Salesforce Foundation and others to inspire companies around the world about the benefits of early stage corporate philanthropy. Through Pledge 1%, over 1800 companies have donated one per cent of their equity, people or product to charity. In Canada, over 75 companies have already taken the Upside pledge, including Hubba, which raised Series B in funding in December 2016. New members include Wattpad, Wealthsimple, and Overbond, with additional members to be announced leading up to Canada’s 150th birthday.

“At Wattpad, we believe startups aren’t just about profits, they’re about giving back to communities, at home and abroad. We’ve already made a remarkable impact on millions of people’s lives around the world. Today, we pledge to join the 150×150 campaign to demonstrate our continued commitment to positive social impact,” said Allen Lau, Wattpad co-founder and CEO. “Whether you’re in the early stages or a well-established start-up nearing exit, it always makes sense to support charities that serve your users and mean something to your team. If you haven’t already joined the Upside Foundation, what are you waiting for? Join the 150×150 campaign today!”

Any Canadian startup or private high-growth company can take the Upside pledge by committing stock options or warrants that will be converted to cash at the time of an exit or IPO, and donated to a registered Canadian charity.

“I’ve always believed in giving back to the community,” said Vuk Magdelinic, CEO of Overbond. “I’m proud that we have now found a way to make Overbond’s success mean that charities in the community will win alongside us.”

To date, there have been two exits from the Upside network, including BlueCat Networks, which sold for $400 million in February 2017; BlueCat CEO, Michael Harris donated the proceeds from a portion of his stock options to the Enbridge® Ride to Conquer Cancer® benefiting the Princess Margaret Cancer Centre. The first company to exit was Understoodit, who was acquired by EventMobi in 2013 and donated their equity proceeds to the East York Learning Experience and Mentoring Junior Kids Organization. The Upside Foundation is led by a coast to coast Board of Directors and Advisory Board of industry leaders and partners with leading incubators, accelerators and investors – creating a supportive community for members to be a part of.

See:  2017 Canadian Online Funding Directory

“People work at startups because they want to effect change, and the Upside Foundation enables startup employees to have a meaningful impact on their community,” said Mike Katchen, founder and CEO of Wealthsimple. “Our team is proud to join the 150×150 challenge.”

How Companies Can Take the Pledge

The Upside Foundation encourages Canadian companies to join those who have already taken the pledge.

  1. Companies will need to fill out the online pledge form found on The Upside Foundation’s website and a representative will be in touch.
  2. Once the pledge form is received, companies will receive detailed instructions on how to contribute from an ESOP (employee stock ownership plan) or a simple legal form, with flexibility depending on the stage of the company.

Social Links

Website: upsidefoundation.ca/
Instagram: instagram.com/upsidefoundation/
Twitter: twitter.com/sharetheupside
Hashtag: #150×150
Facebook: facebook.com/The-Upside-Foundation-of-Canada-409389922465814/
LinkedIn: linkedin.com/company-beta/3205708

About The Upside Foundation

The Upside Foundation is a charitable organization that allows startups to give back by donating equity in their company to Canadian charities. Early stage companies pledge stock options or warrants to The Upside Foundation, convertible into a small portion of equity.

To learn more about The Upside Foundation visit: www.upsidefoundation.ca


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 1500+ 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 www.ncfacanada.org.

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AngelList Syndicates now available to startups and investors across Canada

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Betakit | | Mar 28, 2017

AngelList logo

Last October, BetaKit reported on the long-awaited arrival of AngelList Syndicates to Canada, albeit in limited form, following the Ontario Securities Commission’s (OSC) decision to allow Ontario investors to lead and participate in AngelList Syndicates as part of a two-year trial program. Back then, AngelList’s advisor to Canada, Alex Norman, said it would be “just a matter of time until it’s across Canada.”

“Founders are building great companies from coast to coast and we can now help them succeed.”

As of today, AngelList Syndicates are available across Canada. Any Canadian startup can now raise funds on the platform, and accredited Canadian investors can now apply to invest on the platform (unsure if you’d qualify? read our extensive breakdown of how AngelList works).

“We are excited that the CSA [Canadian Securities Administrators] has approved AngelList Syndicates countrywide,” Norman told BetaKit. “Founders are building great companies from coast to coast and we can now help them succeed by providing access to capital/funding via the AngelList platform.”

See:  Angel investing was always male-dominated. That’s finally changing

As part of the October announcement, Creative Destruction Lab and NEXT Canada were identified as the two launch members of the OSC’s Approved Incubator Program, which allows investors to invest in a subset of companies and not count towards the Ontario investor limit (more on that here). Since then, the OCE and YEDI have been added to the AIP list, and is looking to take applications from organizations across Canada. Interested incubators, accelerators, “technology transfer offices” and organizations that meet the criteria listed below should drop AngelList a line via email.

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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 1500+ 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 www.ncfacanada.org.

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Are Overseas Portals the Next Big Thing in US Equity Crowdfunding?

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Crowdfund Insider | By | March 21, 2017

Non-resident US funding portal registration

Much excitement has been generated with the enactment of Regulation Crowdfunding (Reg CF) and the ability of non-accredited investors to invest in startup companies in the United States. The SEC recently reported that while early capital raising efforts is still growing, Regulation Crowdfunding has provided a new mechanism for small, domestic issuers to raise capital that was previously unavailable.

There is speculation that soon, with a Republican Administration in Washington focused on deregulation, Regulation Crowdfunding may be a “huge” beneficiary, including an expansion permitting an issuer to raise $5 or perhaps even $10 million per annum, rather than the current $1 million limit. While a common complaint during its first year is that the issuers themselves must be domestic United States companies, the same does not hold true for crowdfunding portals.

Regulation Crowdfunding specifically permits “nonresident” funding portals to operate in the United States.

A nonresident funding portal is a funding portal incorporated in or organized under the laws of a jurisdiction outside of the United States, or having its principal place of business in any place not in the United States. Thus you can operate overseas and still be permitted to engage in business as a U.S. funding portal.

See:  Title III Crowdfunding For Real, Part I

Nonresident portals can quickly broaden US crowdfunding efforts to overseas, and raise foreign investor (crowd) capital for US companies. This together with the benefit that a crowdfunding portal is specifically exempt from broker-dealer registration under Exchange Act section 15(a), provides ample incentive to foreign entrepreneurs to seek to participate in US small issuer capital formation.

Nonresident funding portals share the same benefits as domestic funding portals, including the right to post offerings on their portal and receive transaction-based compensation (commission and equity) for their services. Nonresident funding portals may even have a competitive advantage in accessing capital for US crowdfunding offerings. MrCrowd.com and its CEO Allen Au, based in Hong Kong, appear to be the first nonresident funding portal to see an opportunity and become registered with FINRA.

For the US Securities and Exchange Commission (SEC) to permit nonresident funding portals to be based outside of the US, the portals must be subject to SEC and Financial Industry Regulatory Authority (FINRA) regulation. Registration of a nonresident portal is conditioned on an information sharing arrangement in place between the SEC and the competent regulator in the jurisdiction under the laws where the nonresident funding portal is organized or has its principal place of business.

Continue to the full article --> here

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 1500+ 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 www.ncfacanada.org.

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[Montreal FrontFundr Event Mar 29]: Collecte de fonds en ligne : Votre nouvelle alternative de financement

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FrontFundr | Jill Earthy | March 22, 2017

FrontFundr event in Montreal

Raising Capital Online: The New Funding Option

Collecte de fonds en ligne : Votre nouvelle alternative de financement

Wednesday, March 29th/Mercredi 29 mars: 5:30 - 7:30 pm

McMillan LLP, 1000 Sherbooke O./W., #2700, Montréal

Register here: https://frontfundr5a7montreal.eventbrite.ca

 

Participez à notre 5@7 afin d’en apprendre davantage sur l’investissement participatif et partager un verre avec les membres de l'équipe de FrontFundr.

Cet événement est une occasion pour les entreprises, les investisseurs potentiels et tous les curieux de se rencontrer, et de parler de l'opportunité de lever du capital en ligne ainsi que de l’investissement participatif au Canada.

Venez donc rencontrer le CEO de la plateforme de Frontfundr, Peter-Paul Van Hoeken, de passage à Montréal afin d'en apprendre davantage sur la levée de capitaux en ligne. Faites vite, les places sont limitées!

Come to our 5@7 to learn more about equity investing and share a drink with members of the FrontFundr team.

This event is the occasion for companies, potential investors, and those who are simply curious to come out, network, and learn all about the opportunities of raising capital online and the equity crowdfunding landscape in Canada.

Come and meet the CEO of the Frontfundr platform, Peter-Paul Van Hoeken, to learn more about raising capital online.Please RSVP in advance, as space is limited!


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 1500+ 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 www.ncfacanada.org.

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The crowdfunded electric sports car: Dubuc Motors courts investors

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Canadian Manufacturing | Cleantech Canada | Mar 2, 2017

Dubuc motors 2

Interested individuals can own a stake in the company behind the world's first four-seater electric sports car for US$200

MENLO PARK, Cali.—You can own a stake in automotive history for as little as US$200.

Dubuc Motors Inc., the company behind the Tomahawk—the world’s first four-seater electric sports car—has announced the live offering phase of its equity crowdfunding campaign.

After gaining approval from the Securities and Exchange Commission, American automaker Dubuc Motors can now sell equity shares to accredited and unaccredited investors through its website, allowing people to invest in the U.S. and internationally. The minimum investment is $200.

“We have been pleased with the response from the crowd. It’s exciting to see a community of game changers and trendsetters jump on board as shareholders of our company early on,” said Mike Kakogiannakis, co-founder of Dubuc Motors.

The 370-mile range Tomahawk accommodates the big and tall, seating drivers up to 6’5″ comfortably. The rear seats and front and rear cargo space also provide the Tomahawk with more utility than other luxury sports cars.

See: 

“People have embraced the idea that the Tomahawk, although an exotic sports car, can be as practical as a sedan,” said Kakogiannakis.

Dubuc’s first commercialized model is currently the only four-seater electric car on the market that goes 0-60 mph in under four seconds and sells for under $150,000.

You can own a Tomahawk for $125,000. Dubuc is currently accepting $5,000 deposits, and first deliveries are expected in 2018.

Continue to the full article --> here

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 1500+ 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 www.ncfacanada.org.

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