B.C. regulators eye green light for equity crowdfunding

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Vancouver Sun | By Derrick Penner | April 3, 2014

Daryl Hatton Vancouver Sun shotOnline crowdfunding has become a social force worth more than $100 million per year to cool projects and worthy causes in Canada, according to its advocates.

Now British Columbia is among the jurisdictions probing whether it can become an economic force as a method for companies to raise start-up capital from the public — without becoming a magnet for fraud.

Last week, the B.C. Securities Commission posted for public comment a proposed set of Internet crowdfunding rules that would exempt companies from the strict requirements of filing a detailed prospectus that listed companies must abide by.

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The rules would allow companies to raise $150,000 per capital campaign, with a limit of two campaigns per year, and cap investor contributions at $1,500 per person per campaign, similar to the exemption Saskatchewan put in place in December.

As per the Saskatchewan structure, the BCSC proposal calls for all money to flow through a website-based Internet portal.

“This is filling a gap at the low end of the market where a very small entrepreneur can get money from their community to help fund their business,” said Daryl Hatton, CEO of Vancouver-based crowdfunding portal FundRazr.

Start-up companies are generally starved for capital, Hatton said, so anything that can be developed to bridge small firms from the goodwill of family and friends onto the continuum of venture capital helps. He characterized the BCSC rules as a “starter kit” to get a new venture going.

Hatton’s portal is one of the bigger players in the existing crowdfunding structure — often referred to as the rewards and incentives sector — where people solicit funds for projects or causes.

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The way crowdfunding works is individuals and organizations register projects with portals such as FundRazr, Indiegogo or Kickstarter, then launch social-media campaigns to promote them through venues such as Twitter or Facebook. Supporters make their contributions via PayPal, credit card or other online options through the portal.

The difference with the BCSC’s proposed rules is that investors would be buying into the company itself through shares or other forms of capital.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada crowdfunding hub providing education, advocacy and networking opportunities in the rapidly evolving crowdfunding industry. NCFA Canada is a community-based, membership-driven entity that was formed at the grass roots level to fill a national need in the market place. Join our growing network of industry stakeholders, fundraisers and investors. Increase your organization’s profile and gain access to a dynamic group of industry front runners. Learn more About Us | Prezi or contact us at casano@ncfacanada.org.

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