Investment crowdfunding, or crowd-sourced funding (CSF) as it is called down under, generated $72 million in online capital formation, according to an industry report.
Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
Search Results for: equity crowdfunding
Equity Crowdfunding Demystified: Insights from Wefunder and Equivesto
Forbes | Hessie Jones | Apr 3, 2023
Image: Johnny Price Wefunder and Alexander Morsink Equivesto
The time for startups to rethink venture capital alternatives has been gaining momentum.
- Is this the moment for Equity Crowdfunding (ECF) to emerge and become a viable alternative for startups? For startups domiciled in Canada vs the United States, jurisdiction and laws vary when it comes to choosing equity crowdfunding platforms. Qualification, campaign execution and benefits can also be different. What should you consider when getting ready to do your first capital raise?
- I reached out to two ECF platforms: Jonny Price, VP of Fundraising at Wefunder (US) and Alexander Morsink, Managing Partner at Equivesto (Canada) to understand these disparities but also demystify the many stereotypes associated with this emerging fundraising alternative.
See: Australian Equity Crowdfunding Markets Raised $72 Million in 2022
- The Legal Differences between Canada and the US
- Morsink illustrates that the publicly known concept of equity crowd funding is an umbrella term used to describe different ways private companies can raise capital in Canada. Private companies raising capital in Canada use prospectus exemptions, which are legal doorways that any company raising must bring their potential shareholders through.
- The first national ECF rules (NI 45-110 Startup Crowdfunding - similar to RegCF in the US) introduced in 2021 now allow companies raising capital to do so via an online investment platform.
- Offering Memorandum exemption (part of NI 45-106) “which is similar to the Regulation A (US) still allows the company to raise from the general public in Canada, but at no maximum raise limit.” In Canada, this option requires private companies to have ongoing audited financial statements and annual reports filed to regulators where 45-110 does not.
- “Accredited Investor” exemption allows high net worth individuals (HNW) to invest in private companies with no regulatory reporting.
- “Equivesto uses multiple prospectus exemptions at the same time for one issuer, so while a deal on the platform will be listed as an ECF deal open to the public, Angel investors will use the ‘Accredited Investor’ exemption, not the NI45-110 ‘Startup Crowdfunding’ exemption, as the legal doorway to make the investment.”
- Handling large number of investors?
- Wefunder has a lead investor who signs on behalf of all investors via special purpose vehicle (SPV)
- Equivesto recommends issuing a new class of non-voting shares and requiring investors to sign a voting trust agreement. Quarterly updates are recommended to keep investors engaged, and having many smaller investors can benefit the company by providing support and assistance in various ways.
See: Equity Crowdfunding Growth: It Took UK Seedrs 8 Years to Raise the First £1Billion and Only 2 Years for the Next Billion
- Social media is good for ECF because it reaches a lot of people and makes it easy to keep records, but scammers can use it to trick people. How do Wefunder and Equivesto protect people from scams?
- Wefunder and Equivesto both take measures to protect investors from fraudulent ventures in the ECF space, with Wefunder implementing fraud checks and offering features such as Lead Investors to provide signals for investors.
- Equivesto complying with regulatory requirements including verifying company information, conducting background checks on directors, and requiring companies to certify information is truthful before making it available to investors. Companies raising via ECF in Canada must also adhere to strict guidelines when using social media and other platforms to promote their campaigns, and investors are subject to a KYC and suitability review to ensure they are aware of the riskiness of their investments.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Australian Equity Crowdfunding Markets Raised $72 Million in 2022
Crowdfund Insider | JD Alois | Jan 30, 2023
Investment crowdfunding, or crowd-sourced funding (CSF) as it is called down under, generated $72 million in online capital formation, according to an industry report.
- The information is compiled by Birchal, the largest online investment platform in Australia. Birchals has been providing this report for several years now.
- While a smaller market, Australia continues to grow. In aggregate, since 2018, issuers have raised $219 million for approximately 250 SMEs.
- Average deal size – $733,000
- Average individual investment – $1695
- 70 securities offerings were over $1 million
- Total market estimated market cap of firms completing a securities offering at $1.4 billion
- There have been 50 follow-on securities offerings
- The largest securities offering to date was for ZeroCo for $5 million (October 2021)
See: CCA 2022 Investment Crowdfunding Report: 7 Charts Highlight Growth and Impact
- The fastest funding round was for Your Mates Brewing in October 2022 at under two hours
- Birchal reports the bulk of online capital formation for early-stage ventures at 192 offerings raising $144 million
- In 2022, most issuers were “growth stage” (49%) with greater than $1 million in reported revenue. Pre-revenue startups accounted for 16.5% of the funding activity.The number of pre-revenue firms raising capital declined from 2021, while revenue-generating firms raising capital increased dramatically.
- Industry sectors that have been the most popular issuers include:
- Food and Beverage at 39%
- Financial Services at 12%
- Sustainability at 11%
In 2022, most issuers were “growth stage” (49%) with greater than $1 million in reported revenue. Pre-revenue startups accounted for 16.5% of the funding activity. The number of pre-revenue firms raising capital declined from 2021, while revenue-generating firms raising capital increased dramatically.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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William Shatner Feature-length Documentary Reaches $790,000 Equity Crowdfunding Goal (less than a week)
Variety | | Jan 31, 2023
Image: Wikipedia, William Shatner
William Shatner fans bought up all the shares in the actor’s forthcoming feature-length documentary “You Can Call Me Bill” in less than a week — shelling out nearly $790,000 and topping the film’s crowdfunding goal.
- Legion M’s equity crowdfunding round for the Shatner documentary, exploring the life and career of the beloved 91-year-old actor, as of Monday had sold out from reservation holders before the company opened the offering to the public. Within four days, the project raised $789,655 from 1,338 investors.
- Distribution: The documentary has a production budget of $565,101, according to Legion M’s listing. After “You Can Call Me Bill” deducts expenses to third parties for accounting, legal, marketing and administrative fees, 100% of any revenue generated will be distributed proportionally to the film’s investors until they have recouped their initial investment. Any additional net revenue after that will be split, with 33% going to shareholders and 67% distributed to the producers of the film.
- With the Shatner doc, fans were able to invest directly in the Shatner documentary for a minimum of $100, subject to certain SEC restrictions, and they will recoup their money before any profits are shared with Shatner, Legion M or the film’s producer.
- The film is touted as “an intimate portrait of William Shatner’s personal journey across nine decades of a boldly lived and fully realized life.” The documentary “strips away all the masks he has worn during his storied career” — from Captain James T. Kirk to T.J. Hooker and from Alexander the Great to the Priceline Negotiator — “to reveal the man behind it all.”
See: Equity Crowdfunding Growth: It Took UK Seedrs 8 Years to Raise the First £1Billion and Only 2 Years for the Next Billion
William Shatner:
“For years I’ve had people approaching me to do a documentary about my life, but I turned them all down because it didn’t feel like the right fit. When I heard how Legion M wanted to incorporate audiences to be a part of it, it was perfect. Fans have been responsible for my career — it only seems right that they should own this doc.”
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Canadian Equity Crowdfunding Firm, DealMaker, Named 3rd Fastest Growing Company in Canada
Crowdfund Insider | | Sep 23, 2022
DealMaker, a crowdfunding company based in Canada but providing services across the US, has been named the 3rd fastest growing company in Canada – reporting a huge 500% rate of growth. While based in Toronto, DealMaker reports 124 employees with a presence in both the US and South America.
- Co-founded by two attorneys, Rebecca Kacaba and Mat Goldstein, DealMaker is a Toronto-based company that offers sophisticated capital raising tools for companies raising money by selling securities online.
- DealMaker powers a portfolio of primary issuance, shareholder management, and capital raising solutions that includes equity crowdfunding, investor ranking algorithms, and data tools to support all capital raise types and all securities.
- DealMaker enables the full stack of securities exemptions in both the US and Canada – including Reg A+, Reg CF, and Reg D as well as the OM exemption [Offering Memorandum] and private placements.
See: JOBS Act of 2012: Ten Years of Legalized Investment Crowdfunding
- Since the firm’s launch, DealMaker has processed a whopping $1.6 billion in funding enabling more than 650,000 investments. The company claims to have enabled more funding than any other competitor in North America.
- They have a Broker Dealer license, operating via DealMaker Securities
“Our innovation is advancing the equity crowdfunding space by increasing access to capital to founders who previously have been under-funded while also providing pre-IPO investment opportunities for those not behind the gilded gates of Wall Street. We have always been issuer-focused. We’ve built a platform that allows issuers to white-label our technology so they can effectively raise capital on their own website. This is a far cry from the competition, which aggregates multiple deals with a focus on attracting and delivering value to investors,” explained Kacaba.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Equity Crowdfunding Growth: It Took UK Seedrs 8 Years to Raise the First £1Billion and Only 2 Years for the Next Billion
Crowdfund Insider | | Aug 24, 2022
Ten-year-old securities crowdfunding platform Seedrs has recently posted a blog on platform capital raising, which highlights sector growth. Seedrs reports that it took 8 years to top £1 billion in funding raised, but two years later, Seeders has doubled that amount surpassing £2 billion this month (or £2.1 billion according to their website).
The money raised represents 1722 deals, with probably a good number of follow-on rounds. Investors come from 90 different countries to back these private ventures.
See:
$100M Crowdfunding Deal: Republic acquires the UK’s Seedrs for European expansion
While not all of these early-stage firms will generate significant returns for investors, some do – just like a professional VC expects. At the same time, the money invested in these companies gets spent on running a business, jobs are created, and employees gain valuable experience in the real economy. A thriving, innovation-driven economy that generates wealth and prosperity by default entails risk.
Jeff Kelisky, CEO of Seedrs, said the company’s performance validates “all that hard work” as they focus on building a truly global investment platform:
“It really is the most revolutionary time for Seedrs and I can’t wait for our next chapter.”
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Hardbacon: Why we launched an equity crowdfunding campaign in the middle of a bear market
Hardbacon | Julien Brault | Jun 16, 2022
When we launched our equity crowdfunding round in May, the stock market was down 20% year-to-date and the value of Bitcoin had fallen 35%. While many of our investors were eager to reinvest, it was also obvious that many of our investors were impacted by the downturn and could decide not to reinvest in Hardbacon.
That said, postponing the round didn't necessarily seem like the right decision. First, I didn't have a crystal ball to tell me when, in the future, the markets would be more conducive to such funding rounds. Second, I knew that by successfully closing a round despite the economic environment, Hardbacon would be better positioned than ever for what comes next.
And it worked, since we reached our funding goal of $500,000 within a week of launching the round!
Right now, many fintechs are cutting positions in order to survive longer without seeking new capital. However, at Hardbacon, we’re actually looking to expand our team to accelerate our growth and to solidify our status as a key player in personal finance and financial product comparison tools in Canada.
As we plan to expand through acquisitions while simultaneously investing in our organic growth, the shortage of traditional sources of capital for start-ups could work in our favour. As VC funding is bound to get more scarce, our competitors will seek to sell themselves and we should be well positioned to snag the best in breed!
Hardbacon: a growth success story
As of today, Hardbacon reaches at least 232,000 unique visitors every month through its website, 38,000 registered users on its mobile app, and that doesn’t include our affiliate network and other owned websites! In February 2020, our website was only reaching 12,000 unique monthly visitors and our revenue was 10x lower than today. That’s what made people think that Hardbacon was an overnight success.
On Demand: Fintech Fridays EP51: Bacon and Eggs with Julien Brault, CEO, Hard Bacon
In fact, nothing could be further from the truth! We tested one-thousand-and-one business models, price structures, and market segments! Most of our hypotheses were rejected by the market up until we embraced our current business model back in 2020. It is the affiliate marketing model.
Realistically, it means that we help our clients, who for the most part are financial institutions, acquire customers. On the other hand, contrary to traditional media which sells ads, we invoice based on results, which might be a credit card application, an account opening, or a sign up. If you’ve ever used our credit cards comparison tool and found a card you liked, chances are that we earned a bit of money!
If you want to know more about our business model and the terms of our current round, I invite you to visit our FrontFundr page.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Support NCFA by Following us on Twitter!Follow @NCFACanada |
UK Equity Crowdfunding Platform Seedrs Achieved Record Funding Levels in 2021
Crowdfund Insider | | Jan 12, 2022
Seedrs, a leading UK-based securities crowdfunding platform that is merging with Republic, has provided a retrospective of 2021 performance.
According to Seedrs, 2021 was a year that delivered record-level funding. The top-line numbers are as follows:
- £696 million invested into securities offerings
- 310 funded deals
- 102 securities offerings of over £1 million
- A 90% funding success rate
- 12 portfolio companies delivered profitable company-level exits in 2021.
See: $100M Crowdfunding Deal: Republic acquires the UK’s Seedrs for European expansion
The largest private offerings listed on Seedrs include:
- Lick – £15 million – most funded
- Ziglu – £7.326 million or 724% as the highest percentage funded
- Chapel Down – £6.95 million involving 4172 investors – the most investors of any securities offering
Seedrs not only facilitates capital formation in the UK but is active in continental Europe having funded 33 EU businesses during 2021. Investors harken from 74 different countries.
A key feature of the Seedrs platform is its successful secondary market – a service that has been years in the making as private securities trading is a challenging task. Seedrs reports that during 2021 trading increased by 60% versus 2020 with £8 million in securities traded.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Support NCFA by Following us on Twitter!Follow @NCFACanada |
