Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Equity Crowdfunding, Alternative Funding
Taking the ‘Fun’ Out of Crowdfunding
Forbes | Guest Post by Tom Murphy | December 12, 2013
Because it sounds good, the term “crowdfunding” is applied, sometimes confusingly, to vastly different funding models, including “donation funding,” (e.g. Kickstarter), in which no investment is involved and “backers” expect no return; “advertised” private offerings, which have only been legal since September and allow the general solicitation of investors directly by private companies seeking funding, known as “issuers”, or through intermediary sites like CircleUp, provided all investors are “accredited” (meaning wealthy); and “real” equity crowdfunding contemplated by the JOBS Act, which I describe here. This last model would allow non-public issuers to sell securities to anyone, regardless of their sophistication, net worth, or income, and no matter how risky, albeit in limited amounts and with many restrictions.
Related: Saskatchewan Approves Equity Crowdfunding on December 6, 2013
While the first two models work, the restrictions and requirements in the JOBS Act and the SEC’s proposal are too substantial, for this model to work efficiently in the real world. All three sets of crowdfunding players – the issuers, investors, and portals (websites that connect the other two) are likely to be disappointed.
For issuers the first problem is that, unlike private offerings, advertised or not, in which confidentiality can be generally maintained, crowdfunded enterprises will be public companies “light.” They will not be subject to all the voluminous and costly rules applicable to publicly traded companies, but several parallel unpleasantries will nonetheless apply.
For one thing, crowdfunded companies will be required make publicly available their financial statements (or, tax returns), comprehensive offering documents and specific disclosures of the risks involved, by filing with the SEC. This sensitive information will be accessible to competitors, suppliers, customers, employees and everyone else, at a time before the issuer even knows if the offering will succeed.
Related: How the SEC Listened to the Crowd for Crowdfunding Rules
There will also be ongoing requirements to provide updated information publicly. This “open book” life has always been a major reason to forego or delay a public offering and should have a similar effect on those considering equity crowdfunding once they fully understand it.
A related risk, exclusive to equity crowdfunding, will be the uniquely public nature of the offering process itself. To allow the “wisdom of the crowd” (if such exits) to be tapped, portals will be required to facilitate investor commentary and communication. Anyone, even those with ulterior motives, may provide “advice” to potential investors, right on the portal website.
Crowdfunding will likely be quite expensive for the amounts raised. Offerings are limited to $1 million annually and even that drops to $500,000 if the company’s financial statements are not audited, and $100,000 if they’re not reviewed. Financial statement preparation and auditing can be expensive, especially when auditor reports will be used to sell securities.
Related: Let the Crowd Raise Capital, Special to the Financial Post
Other expenses will include legal fees to prepare offering documents designed to achieve the delicate balance between making the investment attractive while still being sufficiently candid and cautionary to avoid liability for inaccurate or misleading statements. This is what we securities lawyers do for a living and it’s expensive to do it right.
Crowdfunded companies will have large numbers of shareholders – likely upwards of 1,000 – to whom they and their directors and officers are accountable and owe fiduciary duties. Many of those investors will be unsophisticated and unforgiving if things don’t go well. This means spending significant time and resources on investor relations, and in some cases outright “handholding,” or risking an unhappy and perhaps litigious shareholder base.
Picking the right portal will also be important. Each offering must occur through only one portal of an SEC-registered broker dealer or a “crowdfunding portal.” Neither the portal nor the issuer will be allowed to advertise a specific offering or give one offering prominence over others on the site. So issuers will not be allowed to use multiple sites or other means to increase their exposure. Only advertising of the portal itself will be allowed.
Portals will be required to register with the SEC and with either a securities exchange or FINRA. They will have expensive regulatory requirements, including reporting, record keeping, and regulatory inspections as well as specific diligence obligations regarding the issuer, like conducting background checks on its principals and confirming that it can maintain adequate records.
There will be specific portal requirements for the operation of the sites, such as holding investor funds, allowing cancellation of orders, providing investor education, and facilitating communication among investors.
Crowdfunding portals will also be prohibited from investing in their issuers or engaging in trading, advisory, or custody activities and thus will have limited income sources beyond their share of offering proceeds. Perhaps even more troubling, the SEC release accompanying the proposed rules indicates that portals will likely be subject to the same securities law liability as issuers. For all these reasons issuers can expect portals to charge a substantial percentage of the small amounts raised to compensate them for their costs and risks.
Continue to the full article --> here
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 eBrochure | Prezi or contact us at casano@ncfacanada.org.
Let’s protect investors from risky startups: NCFA Canada response
NCFA Canada | Craig Asano | December 11, 2013
On December 9, 2013 an opinion post article in The Toronto Star, personal finance section, sparked one of our twitter followers to ask us to respond (view article).
Roseman: In the 1990s, many Canadians were urged to put their retirement savings into labour-sponsored venture capital funds. It seemed like a no-brainer to receive $1,500 back on a $5,000 purchase because of federal and provincial tax credits. And the RRSP tax deduction reduced your cost even further. The only thing wrong with this scenario was that labour-sponsored funds had mediocre results. Only a handful made any money at all, even over the eight-year holding period required to avoid repaying the tax credits. And many funds suspended redemptions after the 2008 stock market crash, leaving investors on the hook for an even longer period. Labour-sponsored funds flamed out once the provincial tax credits vanished. But a new venture capital idea is making the rounds – one with the potential to part people from their savings in an equally devastating way.
NCFA Canada: While government tax incentives designed to stimulate the economy is generally seen as a good thing, it’s important to understand that venture capital funds and equity crowdfunding securities are not the same investment.
Venture capital funds generally seek scalable technologies or business models that have the potential for explosive returns. They are looking for start-ups with a unique IP, market differentiation and interest to become a dominant player in a specific industry. They commit high risk early stage seed capital, apply expertise and resources, and then seek follow-on funding rounds as they scale and tweak the model working towards a predetermined exit or IPO.
Equity crowdfunding investments on the other hand, might involve raising a small amount of capital to support a community business, such as a local restaurateur seeking funds to renovate their space and menu and are offering non-accredited investors a chance to invest in their local community in exchange for shared ownership in the business, profit sharing and possibly some co-owner perks (i.e., product discounts).
Roseman: It’s called equity crowdfunding – and it’s different from the crowdfunding you find at portals like Kickstarter and Indiegogo. When you pledge money in a crowdfunding campaign, you get rewards, such as a newsletter or a new product when it’s commercially available. But with equity crowdfunding, you get securities. You become an investor in a startup company. Here’s the problem: These firms are still searching for a market niche and a pathway to profit. Since their shares are not traded on stock exchanges, they can be hard to sell in a crisis.
NCFA Canada: Make no mistake, if you are investing in a start-up you should not be expecting to receive a quick return. Conversely, as an investor, if you are seeking short term gains on the stock market then you might consider high volume stocks that exist on the public exchanges or low risk money market instrument, such as a Guaranteed Investment Certificate (GIC).
Investing privately in start-ups and small-to-mid-size enterprises (SMEs) through an equity crowdfunding specific exemption offers the general public the choice of participation without being an accredited investor. Note, with current income and asset thresholds less than 4% of Ontario and the Canadian population qualify as an accredited investor (see OSC Review pg19).
For entrepreneurs, 4% is a very small pool of 'angels' to approach for seed capital to develop a startup or small business. No wonder Canada has a funding crisis (i.e.,funding gap) and the human capital of entrepreneurs and innovators are migrating to the U.S. and other countries.
Equity crowdfunding is about supporting job creation and innovation by providing desperately needed seed capital to entrepreneurs and small business owners who are the backbone of the Canadian economy.
Investors will be given dashboards of tools and information to assist them in evaluating and selecting opportunities that match their investment profile in terms of risks and rewards. Many investors who support small businesses are looking for double or triple bottom returns and are seeking a mix of both financial and non-financial returns. They want to participate and engage with entrepreneurs and share their experience, insights and networks.
Roseman: The Ontario Securities Commission wants to make it easier to raise capital among small to medium sized enterprises. It plans to release new rules in the first quarter of 2014, with a 90-day comment period before taking effect. “It will happen,” OSC vice-chair James Turner said in a speech last week to the CFA Institute. “There is a new generation that expects to invest on the Internet. They want regulators to get out of the way.”
View: Saskatchewan Approves Equity Crowdfunding Exemption on Dec 6, 2013
The OSC is suggesting possible ways to limit losses for participants:
Your investment is capped at $2,500 in a single issuer or $10,000 in a calendar year.
You have a cooling off period of two business days to withdraw from your investment decision.
You have to go through a registered investment portal to invest, instead of dealing directly with the issuer.
You must sign a form, acknowledging that you understand you may lose your entire investment and you can bear that loss. “This is extremely high risk capital,” Turner said. “Ninety-nine per cent of startups won’t succeed. You’re not investing for your retirement. We want people to know that.” In an OSC survey, 12 per cent of respondents who identified themselves as “low risk investors” expressed a strong interest in crowdfunding. This raised concerns about vulnerability to losses and fraud.
NCFA Canada: Fraud exists in every man-made system whether it involves a credit card, insurance program or publically traded company like Sino Forest. With crowdfunding the appropriate safeguards need to be put in place to help identify and mitigate fraudulent activity, full stop.
Crowd governance will play a role. The diversity of investor participation in crowdfunding markets allows for a wide range of perspectives and investor due diligence to occur – think yelp reviews for investments.
A key concept that was discussed at the CFA event was the portal as a gatekeeper.
What is the appropriate level of initial screening and due diligence for a portal?
- Regulatory costs (to operate a portal or to undergo an equity crowdfunding issue) and related procedures should not be so excessively expensive or burdensome that it suppresses market innovation before it’s even had a chance to ‘get out of the gate’. We should be looking for cost effective and streamlined solutions that can be implemented and monitored effectively.
- Regulations should be scalable based on the size of capital raise and the issuer type (where possible). If, for example, a first year pre-revenue start-up is seeking to raise a small amount of capital (i.e., $300,000), they shouldn’t be required to provide audited financial statements.
- Regulations of an equity crowdfunding portal should be lighter than the current EMD requirements. One model is of course what the OSC has already approved with the SVX (A social impact portal targeted at accredited investors and funds), which is a Restricted Dealer category exempt from suitability (limited KYC and no suitability). An online streamlined offering document could be used to provide investors with an appropriate amount of disclosure.
Examples of portal screening requirements of issuers and investors:
- Portals should be required to disclose how they get paid and who key stakeholders of the company are
- Track all historical transactions on its own portal and provide periodic updates to the OSC who in turn should determine what aggregate information should be shared with the public
- Portals obligation to take reasonable measures to prevent and report fraud
- Reasonable measures to provide investor education and capture risk acknowledgement from purchaser
- Reasonable due diligence on all issuers allowed to transact on their portal including rudimentary background checks on directors, founders and the leadership team.
- Portals must ensure compliance of investor/issuer caps for all transactions that occur on its own portal
Related: NCFA Canada's Response to OSC Staff Consultation Paper 45-710
Marian Passmore, policy director at FAIR Canada, listed other ways to protect investors in her speech at the same event:
Limit crowdfunding investments to five per cent of a person’s income or financial assets.
NCFA Canada: Verifying a percentage of one’s income or financial assets is an evasive question for investors to answer and a deterrent to invest. We prefer a fixed investment cap to limit investor risk as a more manageable solution to implement and monitor.
Give investors a statutory right to sue for misrepresentation against the issuer and the registered investment portal. This includes the right to start a class action to seek recovery for losses.
NCFA Canada: Although investment risk is capped at small levels, a creative insurance program could help mitigate losses. Further, a low cost and effective dispute resolution process would serve to streamline and resolve issues when they occurred. Ebay has incorporated a standardized process to resolve disputes that seems to work. Perhaps there are some lessons to be learned for the crowdfunding space.
Require issuers to use any capital they raise to expand their business or create jobs within Canada.
Require issuers to supply audited financial statements and tell investors if they plan to use the money they raise in a different way than disclosed in the information statement.
NCFA Canada: We feel this requirement would be too expensive for some issuers. Please see Scalable Regulations above.
FAIR is a five-year-old charitable organization that advocates for investors before securities regulators. (Disclosure: I’m the board chair.)
NCFA Canada: We believe education is crucial to protect investors and ensure that they understand the risks involved with participating in equity crowdfunding investments. There is a financial literacy issue in Canada that needs to be addressed amongst both small business owners and investors. With equity crowdfunding rules imminent in Canada, perhaps it's time for government, industry and academia to allocate a budget and work together to fill the educational gap.
Roseman: “Equity crowdfunding abandons fundamental principles that have made Canadian markets so successful at raising capital – including full disclosure, due diligence and insider regulation,” Passmore said. Reducing investor protection could lead to the opposite of what is intended. It could hurt legitimate businesses by increasing the cost of capital, while making it easier for scammers to steal investors’ funds. In Canada, lotteries are regulated. Schemes to raise capital for startups from unsophisticated investors require the same level of oversight.
NCFA Canada: The advancements of technology in recent years have been remarkable and are changing the way we investigate, communicate, transact and participate in almost every facet of our professional and personal lives. These technologies are secure, tried and tested and are innovating inefficient industries one after another around the globe.
Equity crowdfunding or “the distribution of securities online” doesn’t so much detract from fundamental due diligence and Canadian capital raising regulatory principles but rather it encourages the use of technology to achieve efficiencies in the capital formation process while enabling new channels of funding to fill a crucial funding gap via wider participation models.
Over time, historical transactions will be aggregated into a robust database that will provide more transparency and insight into the inner workings of private market transactions than currently exists today. Longer term, this will ultimately lead to right sized and scalable regulations that appropriately balance the cost of investor protections and efficient capital formation.
If we do not allow the general public to participate through equity crowdfunding mechanisms in a fair and cost effective manner, we are restricting growth on both the buy and sell side of a constrained marketplace and thus, negatively impacting job creation and innovation at feeder levels that need our help the most.
Source: NCFA Canada
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 eBrochure | Prezi or contact us at casano@ncfacanada.org.
Saskatchewan Adopts First True Crowdfunding Private Placement Exemption in Canada*
Venture Law Corporation | Alixe Cormick | December 10, 2013
The province of Saskatchewan today joined the league of various state regulators** who have adopted an intra-state equity crowdfunding exemption by adopting a Saskatchewan only intra-province equity crowdfunding exemption: General Order 45-925 Saskatchewan Equity Crowdfunding Exemption.
These trail blazers have forged ahead with adopting equity crowdfunding rules they believe will work for the constituent groups in their state or province now versus waiting for a federal or harmonized rule to be adopted at a later date. I applaud their initiative.
The province of Saskatchewan has taken a light hand in crafting its equity crowdfunding regulations and filing documents. For starters:
- No complicated private placement memorandum;
- No long disclaimers;
- No mandatory financial statements in offering documents or on an ongoing basis;
- No statutory right of action against the issuer as part of the exemption;
- No certifications by the issuer, directors, officers, promotors, or investors;
- No investor questionnaire;
- No complicated investment formulas for investors;
- No need for a portal to be registered; and
- No “know your client” or “client suitability” rules for portal operators.
Time will tell if the Saskatchewan Financial and Consumer Affairs Authority (FCAA) hit the right note in drafting this legislation. Will a portal emerge to facilitate Saskatchewan equity crowdfunding trades? Will companies/issuers use it? Will potential investors invest in issuers using equity crowdfunding to raise capital? Are there enough potential investors in Saskatchewan to make equity crowdfunding work? Will fraud and business failure run rampant like the naysayers who oppose equity crowdfunding believe is inevitable?
Related: Saskatchewan Approves Equity Crowdfunding in Canada
Saskatchewan’s equity crowdfunding exemption has a three year sunset clause. It’s an experiment; and the rules and related filing documents will likely be tweaked as the FCAA gets real world feedback on the exemption and how it is working for issuers, investors and portal operators.
The remainder of this article, in a question and answer format, will discuss how Saskatchewan’s equity crowdfunding exemption works. A link to the final Saskatchewan crowdfunding rule, related documents and forms can be found at the end of this article.
What Part of the Capital Raising Market is Saskatchewan’s Equity Crowdfunding Rule Aimed At?
The Saskatchewan equity crowdfunding exemption is aimed at private start-up companies and small businesses in the pre-seed, seed and early life cycle of their business. These entities may be formed as a corporation, partnership, limited partnership or any other legal entity. The rule is not available to reporting issuers or investment funds. Only issuers resident with a physical street address in Saskatchewan may use this exemption to raise capital.
How Much Can an Issuer Raise Under the Saskatchewan Crowdfunding Exemption?
Issuers may raise up to $150,000 per offering under this exemption. Issuers and their promoters, directors, officers and control persons may not use this exemption more than twice in a calendar year. This means they can raise an aggregate total of up to $300,000 in a calendar year utilizing this exemption in two separate offerings for either the same issuer or two separate issuers. There also cannot be any concurrent offering offerings by the issuer or any other issuer for the same project under the exemption.
Please note: Issuers can also rely on other private placement exemptions such as the accredited investor or offering memorandum exemption during the year to raise more capital if needed.
Who Can Invest?
Anyone resident in Saskatchewan and over the age of 18 may invest up to $1,500 in an offering under the Saskatchewan crowdfunding exemption. There is no limit on the number of equity crowdfunding offerings by different issuers an investor can invest in under the rule.
What Type of Securities Can Issuers Offer Investors Under this Exemption?
Issuers may offer common shares, preferred shares, debentures, convertible debentures, bonds, partnership units, limited partnership units, promissory notes and any other security instrument other than derivative type securities.
Continue to the full article --> here
Alixe Cormick is the founder of Venture Law Corporation in Vancouver, BC. Alixe concentrates her legal practice in the areas of initial public offerings, follow-on offerings, reverse takeovers, capital pool corporations, qualifying transactions, mergers & acquisitions, secondary listings and exempt market financings. View profile
Let’s protect investors from risky startups: Roseman
Toronto Star by Ellen Roseman | December 9, 2013
The Ontario Securities Commission wants to let you invest in startup firms over the Internet. But its embrace of crowdfunding has risks.
In the 1990s, many Canadians were urged to put their retirement savings into labour-sponsored venture capital funds.
It seemed like a no-brainer to receive $1,500 back on a $5,000 purchase because of federal and provincial tax credits. And the RRSP tax deduction reduced your cost even further.
The only thing wrong with this scenario was that labour-sponsored funds had mediocre results. Only a handful made any money at all, even over the eight-year holding period required to avoid repaying the tax credits.
And many funds suspended redemptions after the 2008 stock market crash, leaving investors on the hook for an even longer period.
Related: Saskatchewan Approves Equity Crowdfunding on December 6, 2013
Labour-sponsored funds flamed out once the provincial tax credits vanished. But a new venture capital idea is making the rounds – one with the potential to part people from their savings in an equally devastating way.
It’s called equity crowdfunding – and it’s different from the crowdfunding you find at portals like Kickstarter and Indiegogo.
When you pledge money in a crowdfunding campaign, you get rewards, such as a newsletter or a new product when it’s commercially available.
But with equity crowdfunding, you get securities. You become an investor in a startup company.
Here’s the problem: These firms are still searching for a market niche and a pathway to profit. Since their shares are not traded on stock exchanges, they can be hard to sell in a crisis.
The Ontario Securities Commission wants to make it easier to raise capital among small to medium sized enterprises. It plans to release new rules in the first quarter of 2014, with a 90-day comment period before taking effect.
“It will happen,” OSC vice-chair James Turner said in a speech last week to the CFA Institute. “There is a new generation that expects to invest on the Internet. They want regulators to get out of the way.”
The OSC is suggesting possible ways to limit losses for participants:
Your investment is capped at $2,500 in a single issuer or $10,000 in a calendar year.
You have a cooling off period of two business days to withdraw from your investment decision.
You have to go through a registered investment portal to invest, instead of dealing directly with the issuer.
You must sign a form, acknowledging that you understand you may lose your entire investment and you can bear that loss.
“This is extremely high risk capital,” Turner said. “Ninety-nine per cent of startups won’t succeed. You’re not investing for your retirement. We want people to know that.”
In an OSC survey, 12 per cent of respondents who identified themselves as “low risk investors” expressed a strong interest in crowdfunding. This raised concerns about vulnerability to losses and fraud.
Related: NCFA Canada: Equity Crowdfunding Principles & Response to OSC Staff Consultation Paper 45-710
Marian Passmore, policy director at FAIR Canada, listed other ways to protect investors in her speech at the same event:
Limit crowdfunding investments to five per cent of a person’s income or financial assets.
Give investors a statutory right to sue for misrepresentation against the issuer and the registered investment portal. This includes the right to start a class action to seek recovery for losses.
Require issuers to use any capital they raise to expand their business or create jobs within Canada.
Require issuers to supply audited financial statements and tell investors if they plan to use the money they raise in a different way than disclosed in the information statement.
Continue to the full article --> here
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 eBrochure | Prezi or contact us at casano@ncfacanada.org.
Eruptious Response to FCAA’s Approval of Equity Crowdfunding in Saskatchewan
NCFA Canada | Craig Asano | December 8, 2013
Equity Crowdfunding is, as of today, legal in Saskatchewan #SKentrepreneurs pic.twitter.com/W6Ji9f0Gy4
— The Kolo Project (@thekoloproject) December 6, 2013
Saskatchewan becomes the first province in Canada to allow companies to raise capital from unaccredited investors over the Internet via a specific equity crowdfunding exemption.
There was an explosion of support to the BREAKING NEWS that the FCAA (Financial and Consumer Affairs Authority) had approved an Equity Crowdfunding Exemption in Saskatchewan at 11am (CST) late morning last Friday, Dec 6, 2013.
Invitations were sent in advance to a community of top entrepreneurs, innovators, investors and regulatory and ministerial officials who were present for this ground breaking formal event/announcement held at VendAsta Technologies, Suite 405, 220 3rd, Avenue Building, Saskatoon (see Video).
Shortly after 11am CST when the initial announcement was made, the power of the crowd and social media spread the news quickly through the tweeter-sphere signaling that equity crowdfunding was indeed advancing in Canada and that Saskatchewan was the country's first instance to approve a set of intra-provincial equity crowdfunding regulations.
A flood of support...
Intra-Province Crowdfunding: Saskatchewan announces #EQUITYCROWDFUNDING LIVE FROM TODAY! Learn about it here http://t.co/3rOAu6PMAm #NCFAcan
— NCFA Canada (@NCFACanada) December 6, 2013
"SASKATCHEWAN APPROVES EQUITY CROWDFUNDING!!" http://t.co/wZmOqAcECK @ncfacanada
— Alixe Cormick (@AlixeCormick) December 6, 2013
Big Crowdfunding News from Canada @NCFACanada http://t.co/shlkcdUYPF
— Murray McKercher (@MurrayMcKercher) December 6, 2013
BIG NEWS: Saskatchewan first province in Canada to make Equity crowdfunding legal http://t.co/UiTQEJXaTR on @NCFACanada
— Seeding Factory (@SeedingFactory) December 6, 2013
Proud the @NCFACanada is advocating for #Crowdfunding. We were there at the #SK #EquityCrowdfunding announcement. http://t.co/NcjxJ5JE1d
— Jeremy Bernard (@legendmarket) December 6, 2013
Huge news! Sask. approves equity #crowdfunding exemption. Here we go! @NCFACanada @Startup_Canada
Dave Wild presenting the @SKGov's new rules for equity crowd funding pic.twitter.com/7ZwAltGzqX
— Marty Gunderson (@IdeaLeader) December 6, 2013
Saskatchewan takes the lead, approves equity crowdfunding. @ncfacanada /ncfacanada.org/equity-crowdfunding-available-in-saskatchewan/
— Nathan Rhodes (@RhodesNathan) December 6, 2013
BOOM! Equity Crowdfunding is Officially Legal in Saskatchewan | BetaKit http://t.co/p91qI9F8MX
— BetaKit (@BetaKit) December 6, 2013
Dave Wild presenting the @SKGov's new rules for equity crowd funding pic.twitter.com/7ZwAltGzqX
— Nathan Rhodes (@RhodesNathan) December 6, 2013
— John Wires (@johnwires) December 6, 2013
I am impressed with SK securities regulators' responses to comments to their crowdfunding initiative. http://t.co/XYC3ppLHgm
— Alixe Cormick (@AlixeCormick) December 6, 2013
Important note for small biz & start-ups: #Sask now allows equity crowdfunding, simple/innovative way to raise funds: http://t.co/rUjJ7ZQH1i
— Government of Sask (@SKGov) December 6, 2013
#FF Amazing orgs and ppl changing SKs entrepreneurial landscape this wk @bhoessler #NSCIL @CFSaskatoon #FCAASask @NCFACanada @suzannepash
— The Kolo Project (@thekoloproject) December 6, 2013
Participants in Friday morning's FCAA announcement of Saskatchewan equity crowdfunding - photo by @suzannepash pic.twitter.com/c7clEJTKHB
— NCFA Canada (@NCFACanada) December 6, 2013
Related Links:
FCAA Approves Equity Crowdfunding in Saskatchewan on Dec 6, 2013
Learn more: Saskatchewan Equity Crowdfunding (FCAA)
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 eBrochure | Prezi or contact us at casano@ncfacanada.org.
New Voice in the Crowd – Craig Asano Champions Education to Bring New Funding Model to Canada
National Post | David Pett | December 3, 2013
Craig Asano Champions Education to Bring New Funding Model to Canada
When Craig Asano’s phone chimes, he looks at his screen, but doesn’t answer. “lt’s usually Ottawa asking for some information,” he says over coffee at a downtown Toronto restaurant. We've gone there a number of times and presented to senior policy makers who are very interested in how crowdfimding works and how they can get involved."
The admission isn't Surprising. Since launching the National Crowdfunding Association of Canada in October 2012, Asano has been in high demand among entrepreneurs, investors and regulators as an educator and advocate For the latest global craze in raising capital for startups and small businesses.
But despite his growing influence, he wants to accomplish a great deal more, including the establishment of a comprehensive, fully integrated national crowdfunding industry that levels the playing field with other countries and helps solve Canada‘s chronic funding crisis. “The rest of the world is moving very quickly and we’ve got to get on board here,” he says. “The way to get it on the agenda is to band together."
Asano’s brainstorm for a National Crowdfunding Association came within weeks of returning to the country from a 15 -year stint overseas as an entrepreneur. After reconnecting with old colleagues, including Brian Koscak, chairman of the Exempt Market Dealers Association of Canada, he noticed Canada’s venture-capital market was leaving entrepreneurs with great ideas desperately short on funding for their innovations.
Related: Crowdfunding is essential for SME innovation and job creation
The solution: Crowdfunding, which pools small amounts of capital from a large number of people usually through online portals. It had at that time emerged as a legitimate solution worth more than US$2 billion globally, but it was sorely underutilized in Canada and still not well understood.
Since then, crowdfunding has gained considerable momentum and the NCFA has rapidly grown to now boast more than 550 members. The association has attracted people from three main categories: industry stakeholders, such as portal operators, consultants and service providers like accountants and lawyers; entrepreneurs and startups looking for funding; and investors or backers ready to put some of their capital to work. Asano says the NCFA‘s focus is on education and advocacy, but it also provides an important networking opportunity.
Continue to the full article --> here
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 eBrochure | Prezi or contact us at casano@ncfacanada.org.
The rise of angels and crowdsourcing
Backbone Magazine | By Ian Harvey |November 28, 2013
For start-ups, it’s always about the money. With the exception of serially successful entrepreneurs, early-stage companies only get so far bootstrapping or begging funds from family and friends. Enter two of the fastest-growing sectors of start-up funding in Canada: crowdsourcing and angel investors. With some well-publicized success stories, government policy shifts and funding assistance from players like the National Research Council, the Business Development Bank of Canada and angels, the money is flowing.
“The trend line is improving,” said Mike Edwards, a Vancouver-based angel. “There are more entrepreneurs trying, and more people looking for ways to develop more disruptive technologies, creating more volume and more successes.”Consider Hootsuite. The four-year-old Vancouver-based social media company raised $165 million in ‘B’ round financing last summer, after getting $20 million from OMERS Ventures a little over a year ago. These types of stories will boost angel investments, Edwards said, because it all “started with angel capital.”
Strength in numbers
More recently, crowdsourcing has become a popular platform to raise money, whether you’re Spike Lee making a movie or a Web site looking to expose a video of an alleged crack-smoking mayor. But there are risks, said Craig Asano, executive director of the fledgling National Crowdfunding Association of Canada (NCFA), which wants to facilitate the flow of cash and create a series of standards and protocols to protect investors.
“Looking at Industry Canada numbers for SMEs, VCs funded only about one per cent,” he said. “We think crowdsourcing could fund 17 per cent of those SMEs, and that’s $4.6 billion in funding.”
There are already more than 60 crowdfunding portals, but because of securities regulations, they’re restricted to a donate-reward model in which people pony up simply because it’s cool to invest in something they believe in. Instead, some portals want to issue shares and equity, a development Asano said is the next logical step.
That, in turn, is attracting attention from bodies like the Ontario Securities Commission, which fears fraudsters will rip off innocent investors. As B.C., Saskatchewan and Ontario circulate proposal papers, the bigger risk, Asano said, it that this could smother the opportunity, paperwork, compliance issues and capping investor and funding amounts at unreasonably low levels.
Angels’ landing
Angel financing, meanwhile, is getting a massive boost from the increased participation of the Business Development Bank of Canada (BDC).
“About five years ago we realized the system was broken,” said interim vice-president of strategic investments Dominique Bélanger, referencing the 2008 global fiscal crisis that dried up funding.
It was a major shift, Bélanger said: “The idea is to be a catalyst, not replace funding sources. We made the mistake in the 1990s of copying the successful model in Silicon Valley, but it was just a dumb cut and paste without thinking about how it can work here.”
Related: Join the National Crowdfunding Association of Canada today
With $1 billion to invest, BDC is emerging as the go-to partner, galvanizing angel groups and working with accelerators like GrowLab, Extreme and Communitech. “Our mandate is to help high-growth-potential people build their business better and faster,” he said.
For example, a 90-day program at Communitech exposes entrepreneurs to hundreds of other successful entrepreneurs who mentor them, and the best of them go forward to a pitch day in front of angels and VCs. Those selected get $150,000 in the form of a convertible note from BDC, which sets terms and conditions for investments from angels, and some go on to raise more based on that initial kick start.
“We had one start-up that raised $600,000 from angels on top of the $150,000,” he said.
In the case of the Real Ventures Fund, BDC put up $3 million, which then prompted angel groups to invest another $15 million. Today, Real Ventures has 44 companies in its portfolio with an average $185,000 investment in each.
Against all this BDC interest, however, the glue holding the ecosystem together is the angels, who are there investing long before the venture capital funds or the banks.
Angel investors aren’t just people with money to burn, said Yuri Navarro, national director of the National Angel Capital Organization (NACO). Under federal tax regulations, qualified angel investors must have $5 million in assets and $1 million in liquid assets with a $200,000 yearly income. While 500,000 Canadians meet that standard, not everyone is an angel investor; Navarro said there are 200 to 500 serious angels in Canada, but no one knows for sure.
NACO has a membership list of more than 2,000, including angel groups and their members. “This number is what we consider the ‘visible’ Canadian angel community,” Navarro said. “It’s only a fraction of the total community.”
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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 eBrochure | Prezi or contact us at casano@ncfacanada.org.
