Category Archives: Venture funding Best Practices

Crowdfunding 101

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Rogers Small Business | Robin Roberts | Nov 10, 2017

How to launch a successful campaign for the funds you need

Now that seven provinces (B.C., Sask., Man., Ont., Que., N.S. and N.B.) have legalized crowdfunding for businesses – which involves collecting small contributions from a large group of people – Canadian entrepreneurs have amassed between $250 million and $300 million in the last year alone to start up and scale up their businesses.

But successful crowdfunding is not just about posting a pitch on Facebook and expecting the cash to roll in. Craig Asano, founder and CEO of the National Crowdfunding Association of Canada (NCFA), offers some tips and tools for launching a winning campaign.

Choose your model

There are many types of crowdfunding, but for entrepreneurs, there are really only two models: investment/equity and donation/rewards.

Investment/equity models allow an investor to either buy shares or securities in your venture, or to receive a profit from your product. The equity option is the most successful, according to the NCFA, but tends to work better for established companies looking to expand, rather than bootstrapping startups.

The donation/rewards model, on the other hand, allows people to give money without getting anything in return – other than rewards in the form of whatever the company is selling or providing (e.g., their name on a funders plaque, a free meal at the restaurant, etc.). This model works best for raising capital for a specific product or idea.

Plan, prepare and promote

“You wouldn’t go to market without a strategic plan,” says Asano, who recommends spending up to three months preparing your crowdfunding campaign, adding that you need a good value proposition to present to your customers or investors.

Present your project clearly – have a prototype, if appropriate – so potential donors are confident your venture is on solid ground.

To reach the maximum amount of potential investors, says Asano, you should already have a following, online and off – preferably made up of people who will care about your idea. Use social media, attend networking events, and let your family and friends (and friends of friends) in on your venture. If you can attract media attention, all the better. Research other successful (and failed) campaigns to see what worked, what didn’t and why.

See:  Learn all about the latest innovation finance models in venture funding:  VanFUNDING Nov 28, Vancouver

And once your campaign is launched, keep your donors or investors in the loop about its progress.

Tell a story

To boost your crowdfunding campaign’s potential for success, create an emotional connection between you, your idea and your supporters. Use video, photos and narration to tell a compelling story about why you want to launch your business or product, or grow your company. Two of the most popular crowdfunding portals, Indiegogo (for entrepreneurs) and Kickstarter (for creative projects), walk you through the process and provide online support, as do other platforms, such as Canadian companies Seedlify and FrontFundr.

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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 www.ncfacanada.org.

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How to Effectively Market an Equity Crowdfunding/Reg A+ Offering

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HuffingtonPost | By Eric Fischgrund | Sept 25, 2017

Equity crowdfunding appears to represent a simple solution for businesses – both startup and firmly established – that are looking to raise money to fund their vision. By allowing investors (and fans of the brand) to invest in their company online, companies view this funding mechanism as a way to bypass banks, brokers, and toxic financers. You file significantly reduced SEC-paperwork, throw a website up, and wait for your offering to go viral. Once the internet does its thing and your hyperlink is shared by e-mail as well as endless Facebook and Twitter accounts, the raise will be complete and you can begin planning the listing of your IPO.

If this seems too easy and too good to be true, you’re right – it is.

Unfortunately, too many companies and individuals are being talked into this strategy without the appropriate background information, and as such, the results of poorly executed crowdfunding campaigns are much easier to find that the success stories.

But there are success stories that were made possible only because of those who adequately planned for them. Over the past year, I have spoken with at least 30 companies considering some form of equity crowdfunding (Regulation A+, Reg CF, 506c, testing the waters, etc.). One thing I am continuously surprised by is those who are unprepared to commence an online raise.

See: What Works In Equity Crowdfunding; Insights From Research

As such, here are some general tips for marketing an equity crowdfunding campaign:

1. No two campaigns are alike. Like any marketing or communications initiative, no two companies are the same, and thus, no two crowdfunding campaigns should be executed the same way. The biggest mistake I see is thinking that a one-size-fits-all marketing approach that “worked really well in the past for another company and their raise” – will be successful. It won’t.

“Successful equity crowdfunding does require a great marketing plan executed by a creative marketing team,” said Kendall Almerico, CEO of Bankroll Ventures and one of the country’s leading experts on equity crowdfunding. “Coca-Cola, Cadillac and Calvin Klein do not market their brands the same way. Equity crowdfunding companies must engage a team that understands and markets the company in a unique way that stands out from all the noise.”

Take this into consideration before planning, as each company and campaign requires its own messaging, its own advertising strategy, and its own look and feel. Figure out what your strengths are, and market to them. For example, if your story has great visuals, find a way to leverage it via some form of multimedia, preferably video. Perhaps you are an emerging company working in a high-growth industry with plenty of competition. Focus on how to differentiate yourself from the competition, while outlining the existing market opportunity and what it means for you and your investors.

2. Get your online presence in order. Raising money from a diverse audience and group of sources can be difficult, but nothing makes equity crowdfunding so challenging as to do so with a poorly designed or ill-functioning website. The investment website is the primary way you are soliciting funds, and as such needs to clearly lead potential investors through the offering process. Think about it – using the analogy of an open house – why leave your trash on the front lawn, not fix the fence, and neglect a new paint job? Getting your digital presence ready means focusing on messaging for the website, carefully reviewing the design and aesthetics, proofing all content, and last but not least – making sure the user experience is a positive one! Do not underestimate the importance of the landing page for your online offering.

Further, legal context with regards to selling securities online must be considered. “General solicitation under the JOBs Act can open up many doors for a company seeking investments, but please, run your proposed content by your securities lawyer,” said Andrea Cataneo, a securities attorney with Sheppard Mullin Richter & Hampton LLP.

“Solicitation can mean advertising, webinars, internet offerings, group presentations, but it does not mean hype or exaggeration.”

See: Equity Crowdfunding Is 1 Year Old Today, Wefunder Is Top Platform

3. Identify and market to your audience. Understanding your ideal investor profile isn’t easy, but it needs to be done to build and leverage a captive audience. If you are a company reading this and looking to raise money online, and already possess an existing database of thousands or even hundreds of thousands of contacts (be it customers, clients, partners, etc.) with e-mail addresses, congratulations! You are ahead of the curve. Or, perhaps you already have a good feel for the sort of individual who is likely to invest in your company, and now you just need to go about marketing directly to them. Review site demographics, consider the profile of past investors and interested parties, and try to make that determination early, but…

4.…If you don’t have an existing audience, build one. Far too often a company approaches us with a great idea, a well-designed website and video that clearly spells out the investment opportunity, and a strong message for the media. This should result in success, right? Well, not always. Equity crowdfunding requires some form of direct marketing, and to do so, a company must have a base, either a significant social media following or a database consisting of contact information. If you don’t, social media advertising has proven to be a lead driver of web traffic and conversions. Consider running a Facebook advertising or Google AdWords campaign that drives specifically targeted people to your investment landing page. As many know, online advertising can be precisely targeted and is a great way to get an idea and offering in front of potential investors.

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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 www.ncfacanada.org.

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5 Deal-Breaking Mistakes to Avoid When Pitching for Money

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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 www.ncfacanada.org.

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A Guide to Building an Audience for Crowdfunding

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Indiegogo Blog | Samantha Lewis | June 16, 2017

BRING OUT THE CROWD AND BRING OUT THE FUNDS

Embarking on a crowdfunding journey? When it comes to building your audience, the more people you can get to back your idea the better — but that can be easier said than done. From email lists to social media to meeting potential backers firsthand, gathering a large crowd to fund your idea takes a lot of hard work.

  1. Leverage your network. Never underestimate the power of the people you already know. Family, friends, co-workers and even acquaintances make a great foundation for your campaign community. Our guide will explain how to use your personal network to create a solid base for your crowdfunding audience.
  2. Build a landing page. Every campaign has a story — this is where you tell yours. From who you are and what your mission is to why your idea needs supporting, a landing page is a critical part of any crowdfunding campaign. Serving as an information portal, it’s where potential backers can learn more before a campaign goes live. It’s also an excellent tool for collecting email addresses and provides a link to help you share your story. Check out how to create a landing page for a successful campaign in our guide, which highlights several great examples from fellow Indiegogo campaigners.
  3. Reach out over email. Many campaigners agree: email is the most effective way to attract backers. It’s also not a secret that a healthy email list leads to more campaign contributions. How does one establish such a list? In our guide, we’ll explore proven ways to build a strong email database, capable of capturing and growing your audience before your campaign even launches.
  4. Use social media. Did you know that after email outreach, social media is the next best way to drive traffic to your Indiegogo campaign page? That’s why it’s so important your to properly represent your product on social platforms. Our guide covers everything from when to launch a social media campaign (hint: it’s months before your Indiegogo campaign goes live) to creating hashtags and content to foster a sense of community.
  5. Contact the press. Using media sources respected by your target audience can be a great way to establish trust with backers. But before you reach out to the press, there are few things you should know — like the difference between a pitch email and a press release. Whether you need help creating a media kit or are looking for some tips on crafting the perfect follow up, you can find it all in our handy new guide.
  6. Host events. Did you know that meeting potential backers face-to-face can be a great way to cultivate interest in your idea? From launching a kickoff party and hosting exclusive events for backers to throwing a campaign after party, we’ll show you how to host for the most contributions.

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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 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 www.ncfacanada.org.

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How to succeed at Kickstarter: no ‘magic sauce’ but some factors help

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CBC News | August 14, 2017

From the Pebble smartwatch to Cards Against Humanity and Mystery Science Theatre 3000, Kickstarter — and crowdfunding sites like it — have changed the way small, independent businesses raise capital to get their ideas off the ground.

New stats collected by a recently-graduated Wilfrid Laurier University student and assistant professor Kevin McDermott outline why some Kickstarter Campaigns are a runaway success, and others can't seem to get any momentum.

Looking at two years of Kickstarter campaign data, Andre Fischbacher compared fundraising results from 30,000 projects and after crunching the numbers, some patterns leading to success became evident.

"We developed a machine-learning algorithm and had it perform a statistical analysis on the data," he explained, "with over 60 million data points ... we began to see trends."

Results not guaranteed 

Fishbacher warned that just because someone follows a best practice list, doesn't guarantee a successful campaign. Other factors such as the overall economic environment, or timing of the launch into the marketplace — such as if the product is seasonal in nature — can have a significant impact on the campaign's success.

See: 

Even though the research studied 30,000 cases, "there are still a lot of things that need to be looked at," he said, "but based on our research and what our testing has shown, we are able to predict the future success of a new campaign that the machine-learning algorithm has never seen before with up to 80 per cent accuracy."

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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 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 www.ncfacanada.org.

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Indiegogo’s New Hub for Entrepreneurs Is an Important Reminder to Us All

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Entrepreneur | Entrepreneur Staff | August 7, 2017

Indiegogo announced last week it’s getting into the content marketing game. The crowdfunding site has launched an education center and experts directory specifically catered to entrepreneurs. Of course, the company isn’t alone in these efforts, but still, there’s a savvy reason you should pay attention.

Indiegogo doesn’t just want entrepreneurs -- it wants entrepreneurs before they have a business to promote or a product to sell. The project is an important reminder that content marketing, done right, can develop trust with a customer base before its members realize they are even potential clients.

See: Indiegogo Founder Slava Rubin Talks Equity Crowdfunding on Reg CF Anniversary

According to marketing firm Conductor, customers are 131 percent "more likely to buy from a brand immediately after they consume early-stage, educational content." Its study also found users who read content trusted brands more. Companies that post at least 11 pieces of content a month also saw three times more traffic and four times more leads than those who didn't, according to Hubspot.

Indiegogo’s articles aren’t intended as just a branding effort, sharing company info or staff stories, like the blogs produced by Kickstarter and Crowdfunder, two of Indiegogo’s main competitors. Instead, the articles on Indiegogo’s education center are designed to lead to more informed users and therefore more successful campaigns, thus boosting the platform's bottom line.

"As more entrepreneur ideas are successful, more backers choose to be part of the Indiegogo community and more entrepreneurs choose Indiegogo as a platform because they see the the many ways Indiegogo can help them," Indiegogo CEO David Mandelbrot told Entrepreneur. "We have learned that entrepreneurs launch their projects with the best of intentions but often can use expertise or partners at key points in their journeys to succeed."

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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 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 www.ncfacanada.org.

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Crowdfunding raises a roof: Tips for newbie Crowdfunders

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Charity Village  | Deborah Griffiths | Jun 28, 2017

How could an organization raise a roof for a beloved heritage home before the winter rains set in? A long-time nonprofit client of mine faced this question in spring of 2016.

The roof was going to cost $8,500. The organization had some funds put aside and needed $5,000. How could they gain this amount before winter? This was a modest amount to target and an excellent opportunity to explore crowdfunding and get the job done.

Crowdfunding has enormous potential for nonprofits. From a distance, it looks as though it could solve numerous challenges. But looking at it more closely, would the time and effort spent in learning this system outweigh the funds we gained?

On-the-ground fundraising requires steps, measures, reporting, acknowledgement, and transparent procedures for nonprofits. Would crowdfunding providers wrap those steps into their systems?

There are thousands of crowdfunding platforms from which to choose. How would we find the right one for this project and for future projects for the client?

Here’s how we began the search

We explored reviews from professional organizations and checked with colleagues who might already be using a platform to get their feedback. Few colleagues had tried crowdfunding.

We then checked-out crowdfunding associations: the US-based National Crowdfunding Association, the National Crowdfunding Association of Canada and the UK Crowdfunding Association. These sites discuss industry standards, best practices, and have excellent tutorials, current stat reports, and interviews.

Why go through this vetting?

Because any donor who is serious about clicking on “contribute” to invest in a project wants assurances that their information is secure. They also want to know that the organization would acknowledge the donation and use it as intended.

Our goal was to develop an enjoyable, long-term relationship with a platform that remains current, user-friendly and understands nonprofit business. The platform would have to offer solid payment privacy. Transparency, accountability and donor acknowledgement functions were necessary.

FundRazr

There are many quality platforms from which to choose. FundRazr, based in Vancouver, British Columbia, and launched in 2010 by CEO Daryl Hatton, seemed to be the right fit for the roof project.

FundRazr had established a partnership with PayPal early on and was one of the first platforms to set up a system that embeds into social media. You can link your updates and posts directly into that system and members and followers can spread the word through their communities. They have excellent information sheets, tips, and videos and a responsive support team and a Crowdfunding Success Guide. The set up was quick.

One other plus for FundRazr was their awareness of the benefits of grassroots partnering in rural communities. FundRazr’s collaboration with InvestLocalBC, started by Community Futures Stuart-Nechako, focuses on crowdfunding for community initiatives.

No matter what your location, take a look at how much the platform is putting back into the community, it might make a difference to you.

The campaign

We began the campaign on July 7 by sending out a lead-up article to newspapers about the history of the project and introducing the crowdfunding campaign.

We then edited that article down and distributed it through the society’s monthly e-newsletter with a link to the FundRazr campaign and to Facebook. Potential donors received the information and linked over to the FundRazr site.

We wrapped the tasks into daily operating and worked with the FundRazr team and site format to focus on the campaign and send out thank-yous.

By August 23, we had reached our goal and raised $5,262. The donations came from 32 contributors, all ages, with small and large contributions online and through checks and cash. The roof was up by October.

See:  10 tips for acing your crowdfunding campaign

How did we reach people? We took some advice from Daryl Hatton, CEO of FundRazr, who stressed the need for telling our story in a succinct way. Perhaps our story about the roof of a legacy heritage home needing repair evoked concern, hope, excitement and a willingness to give. Contributing to this simple project made things better and solved an urgent problem.

An interesting point in the campaign occurred when we supported another community crowdfunding effort in our e-news simultaneous to the Capes Roof project. We received positive feedback from this gesture and donations went up.

Connectivity, enjoyment, and social investment thrive in local and rural communities, perhaps because there’s latitude to make independent decisions, shape progress, and collaborate. From our experience, crowdfunding has many levels of opportunities for nonprofits and donors and is the perfect platform for expanding these connections.

A few newbie tips

Check with an accountant before you start. Stay current with information on tax sites to ensure that your campaign fits well within provincial and federal guidelines for donations and providing charitable tax receipts.

Try out a small feasible project first to get your bearings and to gauge what you might need for a larger campaign.

Review the fees that the crowdfunding service provider charges and make comparisons between platforms. Some platforms have monthly fees while others charge a flat rate, a portion of which goes to the provider and a smaller percentage to the payment system. Note that you could be paying out, on average, five percent of the donations to your provider. For my client, having an extended technology team from FundRazr made this a solid investment.

You may like:  Crowdfunding best practices (articles database)

When you’re searching for a platform, ask the same questions donors would ask. How legitimate are you, how private will my information be?

Consider whether you have enough staff to crowdfund. The process requires some time to set up and, to be successful, you’ll need follow-through. If you work with a board and volunteers these people can join your “team.” Platforms like FundRazr have a format for connecting your team and followers.

Have a look at the campaigns the platform is already hosting. Find a few favorites, identify what aspects resonate with you and tailor them to your site. Use your best images for backgrounds and posting. FundRazr has the capacity to brand your crowdfunding site to match the branding on your home site.

Pin your project to the top of your Facebook page and provide share-worthy news about other subjects. This will lead people back to your information without overloading them with your campaign.

If you have incentives that you can provide to donors when they donate at a certain level, this can help. Some people just like to give, so incentives can be an option.

Be prepared.

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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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