Equity Crowdfunding: Five Strategies Guusto Used to Become Canada’s First

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Futurpreneur Blog | January 26, 2016

Written By: Joe Facciolo, Co-Founder of Whistler Tasting Tours & Guusto 

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Fundraising is an inevitable task that plagues most start-up founders, especially those in Canada who are once, twice removed from the silly money that resides in and around Silicon Valley. As water cooler conversations in the tech community often center around the progress of your current “raise”, the topic regularly turns to stories of how investors south of the border move quickly, with the notion that start-ups boasting a solid business idea, a prototype and a semblance of being able to execute should get a shot at finding product market fit or die quickly.

Whether there is any truth to the tales of our southern start-up brethren quickly and effortlessly raising seed capital, this is not the reality for the vast majority of Canadian start-ups.

This is why May 14th, 2015 was a historic day for entrepreneurs and start-up companies across the country. Long-awaited regulatory changes came into effect and opened the door for equity crowdfunding in Canada; this is a practice that has been legal for over two years in a number of European countries.

Related: Equity crowdfunding will soon be legal in Canada. Should you jump in?

With that, I’m excited to say that Guusto, an instant gifting platform (send food, drinks, movies and more) that I co-founded with my childhood friend and business partner, Skai Dalziel, is officially the first Canadian company to raise funds using the ‘Start-up Crowdfunding Exemption’ (via FrontFundr), and were 200% subscribed! Finally, financing opportunities are no longer just the domain of wealthy angel investors.

Eligible start-up companies are able to accept funds, up to $1.5 million annually, from any resident of British Columbia, Saskatchewan, Manitoba, Quebec, New Brunswick or Nova Scotia (Ontario coming soon) in exchange for shares in the company. There is a cap of $1,500-$10,000 per individual investor, depending on the province. The portals also allow for larger sums from accredited investors or friends and family.

Related: The Real Data on Equity Crowdfunding Performance

Raising funds is no easy task, and that includes equity crowdfunding. To successfully close a deal, it takes thoughtful planning. Below are five strategies that helped Guusto make it happen, and perhaps these tips can help you do the same.

1. Get Legal Advice

Speak to your lawyer (get one if you don’t have one) and make sure that your shareholders agreement and offering documents are tight.

2. Launch with Initial Traction & List Investors

Get a few investment commitments, even if they are small, so that when you launch your campaign it’s not sitting at 0% subscribed. Moving the dial-up will give additional confidence to others who might be considering the deal. No one wants to be first. Furthermore, list your investors with their bio on the deal site. If they’ve made other successful investments, make sure that this is noted.

3. Set A Realistic Target & Oversubscribe

Equity crowdfunding is new in Canada and has not reached mass adoption. Take that into consideration when setting your goal. It’s better to set an achievable target and oversubscribe (even if it’s lower than your dream goal) than to never reach the finish line. Overachieving always looks better than underachieving.

Related: This is the best time for startups to get funding in Canada. Here’s where to look for it

4. Video Q&A With Founders

People invest in people. Posting a video on the deal site will give potential investors a look at who you are and how you address some of those burning questions. Have someone off camera conduct the interview so that it appears as natural as possible.

About Guusto
Guusto (guusto.com), named a Top 5 BC Tech startup, is an instant gifting platform that allows you to send food, drinks, movies and more – redeemable at 1500+ locations. Pick up the tab at lunch for a client or buy a friend a glass of wine on their birthday and do it from anywhere. Guusto for biz allows high volume gift senders to generate any number of gift links and earn refunds when they go unclaimed.

About Joe Facciolo
Joe is the Co-Founder of Guusto and the Co-Founder of Whistler Tasting Tours. After graduating in 2003 from Western University, he spent four years living and working abroad. The experiences gained sent Joe back to Canada armed with ideas, drive and a heightened social conscience. When not at the office, Joe can be found playing beach volleyball, riding the bike and ski trails in Whistler, or enjoying good food and a laugh with good company.

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Register today for the 2016 Canadian Crowdfunding Summit | Innovation | Investors | Entrepreneurship

CCS2016 - March 3 2nd Annual Canadian Crowdfunding Summit


 

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

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