Christopher Charlesworth, CEO and Co-founder of HiveWire, Joins National Crowdfunding Association of Canada’s Advisory Board
March 24th, 2017
British Columbia Securities Commission | July 2015
Start-up or early-stage businesses can raise money for their operations by selling securities (such as bonds or common shares) to investors through a start-up crowdfunding campaign. If you contribute, you are an investor and hope to earn interest or participate in future profits of that business.
These three guides assist funding portals, issuers, and investors understand the registration and prospectus exemptions that allow start-up and early stage businesses to raise capital.
You can also find other useful guides from the BCSC here.
No. You must reside in a jurisdiction that allows companies to use an exemption to sell securities to investors through start-up crowdfunding. It is up to you to protect your own interests by knowing what exemption the company is using to sell you its securities. Learn more about exemptions.
In order to raise money through start-up crowdfunding, a company must first complete an offering document outlining its idea and make it available online through a funding portal. There are two types of funding portals:
Pay close attention to the risk warnings. Before you invest, the funding portal will ask you to confirm that you have read and understood the risk warnings and the offering document. These investments are risky and you could lose your entire investment.
No, you may have to hold your investment indefinitely.
The offering document contains basic information about the project, including the minimum amount of money that needs to be raised for it to go ahead. The maximum a business can raise from each investor for a project is $1,500.
Returns are always uncertain and depend on many factors beyond the company’s and your control. The majority of start-up and early stage companies never go public, and assuming this is the case with one you invest in, then you may never be able to sell your shares. That’s what makes it so risky and why you should only invest in it if you can afford to lose your whole investment.
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 1100+ 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.