NCFA: Congrats JOBS Act and to everyone who moved the needle back then and continues to move the needle now. This was the catalyst to peer to peer platform finance, emergence of 'arm chair dragons', VC as-a-service, and to the popularity and growth of AltFi and Fintech broadly
Victoria Bennett, FCIM, BSc(Hons)
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
Fintech Fridays EP57: 10 Years of Investment Crowdfunding: Past, Present & Future Since the JOBS Act
About NCFA Canada | Craig Asano | Apr 11, 2022
Apr 8, 2022: NCFA's Fintech Fridays podcast episode 57
10 Years of Investment Crowdfunding: Past, Present & Future Since the JOBS Act
Host:
Craig Asano, Founder and CEO, NCFA Canada
Craig brings over 20 years of experience as a marketing strategist, software technologist and start-up entrepreneur in technology, finance, manufacturing and real estate sectors. He founded the National Crowdfunding & Fintech Association of Canada (NCFA Canada), a nationally organized non-profit that is Canada’s dynamic and inclusive advocate for the advancement of fintech, open finance, capital markets innovation, digital assets and currencies, P2P, crowdfinance and emerging technologies such Blockchain and AI that are transforming the future of financial services. Craig advocated for and is a key contributor to the birth of disruptive online financing marketplaces, and the P2P Fintech economy in Canada. Learn more about NCFA.
Featured Guests:
Peter-Paul Van Hoeken, Founder and CEO, FrontFundr
After a successful career in international banking, he immigrated to Canada in 2010 and chose the entrepreneurial path in finance and investing. He embarked on a mission to create the New Capital Market – Democratizing funding and investing in private companies. In 2013, Peter-Paul founded FrontFundr to address the challenge that young companies face in generating capital and to unlock investing in private companies to the wider community, the public. FrontFundr is now Canada’s leading online funding and investment platform in the private capital markets. For more info please visit the website.
Alan Wunsche, CEO and Chief Token Office, Tokenfunder
Alan started his career as a software developer/scientist and identified Ethereum early as a game-changer, and envisioned a decentralized future powered by blockchain. He’s implemented enterprise technology-driven business transformations, and was a capital markets and credit risk systems executive at a global bank. Alan founded Token Funder Inc., a Canadian leader in exempt market digital securities investing and trading, and is business building this venture. He launched Canada's first regulatory-compliant security token on Ethereum public blockchain; 1st security token as an EMD (@TokenGX); 1st secondary market security token trading platform for private markets (FreedomX). For more info please visit the website.
Alixe Cormick, President, Venture Law Corporation
Securities Lawyer and Advisor, Founder of Venture Law Corporation who works with privately-held and public companies, mergers and acquisitions, private placement investments, financial transactions, reverse mergers, initial public offerings and licensing matters, as well as general corporate matters. For more info please visit the website.
Sherwood Neiss, Principal, Crowdfund Capital Advisors
Sherwood Neiss, is a Principal at Crowdfund Capital Advisors and a Partner at Crowd Capital Ventures. He’s a serial entrepreneur and investor and was instrumental in helping the JOBS Act get passed. He created the first database that aggregates all online investment offerings under the JOBS Act including research and analysis of securities-based crowdfunding (used by the SEC and policy makers) and works to support local economies right across the United States. For more info please visit the website.
Andrew Dix, Founder and CEO, Crowded Media Group LLC
Crowdfund Insider is the leading news and information web site covering the emerging global industry of disruptive finance including crowdfunding and peer-to-peer / marketplace lending. Recognizing the overlapping aspects of the new forms of finance, Crowdfund Insider’s coverage includes both rewards and investment based segments of crowdfunding. The site provides extensive coverage, and industry leading perspective, from a team of staff writers and leading industry expert contributors from around the world. For more info please visit the website.
Kim Wales, Founder and CEO, CrowdBureau Corp
Kim Wales is a securities-based crowdfunding, P2P online lending, and digital banking pioneer. She brings a deep and broad background in corporate governance, risk management, and banking regulation. Ms. Wales is an author, adjunct professor, and business owner. Since 2017, Ms. Wales is the Founder and Chief Executive Officer of CrowdBureau Corporation, which provides rules-based stock indices for financial products such as ETFs and managed account platforms. The Company also provides research, data analytics, and risk management tools for the peer-to-peer lending and digital banking industry. Kim has been cited over 100 times in U.S. Jumpstart Our Business Startups Act, 2012 final rules for Titles III (Regulation Crowdfunding) and IV (Regulation A+). Kim is also an author and adjuct professor and sits on several boards. For more info please visit the website.
About this episode:
10 years ago in 2012, the Jumpstart Our Business Startups Act (JOBS Act) was signed into law in the U.S. (and eventually a similar exemption was approved in Canada) to encourage more capital to flow to startups, support innovation, and, create jobs. It's significance cannot be understated as the rule change allowed private companies to raise capital by selling securities digitally for the first time via registered online platforms and dealer-brokers. Regulation crowdfunding also democratized previously excluded retail investors (non-accredited) by allowing them to invest directly in startup ventures empowering a new era of digital finance.
See: Crowdfunding is Now a Serious Way for Private Ventures to Raise Capital
A tremendous amount of advocacy and regulatory change efforts took place to make this happen, and since then the original JOBS Act rules have been improved for investment crowdfunding in the U.S., such as increasing the fundraising cap from US$1 million to US$5 million (not in Canada though, we've asked for years ahem).
But there are still many challenges and myths to be debunked. While venture financings are at an all time high in sectors like fintech, it does not mean that startups are awash with capital. While there is growing interest among retail investors to participate directly in these offerings, and take control of their investment future, education and awareness still remains a top priority if industry is to grow in the right ways. Having said that, in the United States, RegCF recently surpassed $1billion raised. Canadian figures are more modest with at least $100 million in equity financings raised on a leading platform.
Today there's also a JOBS Act 2022 proposal on the table but will these changes be sufficient to support evolving technologies and their capabilities while also protecting investors? Regulatory change is slow and regulators should support innovation and competition. All stakeholders need to continue to support efforts to make capital markets whole, so EVERYONE can benefit from the advancements in technology or the wealth gap will continue to widen.
This is a not to be missed episode for anyone interested in the past or future of digital finance and capital markets. Join investment crowdfunding pioneers in both Canada and the U.S. who discuss the 10 year journey from a wide variety of perspectives including the evolution of first generation marketing platforms to the arrival of second generation decentralized finance models powered by blockchain technologies.
Duration: 92mins
Timestamps:
00:00:00 NCFA Fintech Fridays Intro
00:00:17 Craig Asano, NCFA Canada
00:02:06 Andrew Dix, Crowded Media Group
00:02:49 Sherwood 'Woodie' Neiss, Crowdfund Capital Advisors
00:03:32 Kim Wales, CrowdBureau Corp
00:04:23 Alixe Cormick, Venture Law Corporation
00:04:13 Peter-Paul Van Hoeken, FrontFundr
00:05:48 Alan Wunsche, Tokenfunder
00:08:21 RegCF advocacy (SEC, Congress, White House)
00:10:47 Designing the framework
00:11:58 Purpose of the JOBS Act
00:15:10 Road to Equity Crowdfunding in Canada: Change is hard (and long)
00:26:22 Blockchain finance: education and regulatory challenges
00:33:38 Crowdfunding’s Impact and opportunity: first US$1 billion
00:38:39 RegCF to digital finance
00:41:57 Evolution of digital finance Gen1 to Gen2
00:49:23 Digitalizing private capital markets
00:55:03 Ontario’s exemption 45-108 setup to fail
00:59:46 JOBS Act 2022 bill proposed to improve rules in the U.S.
01:00:10 Canada harmonizes equity crowdfunding rules Sep 2021
01:04:00 Educating regulators
01:06:00 Regulators need to support innovation and competition
01:09:00 Financial inclusion
01:11:00 Canadian ECF $100 million and beyond
01:17:00 Decentralized Finance is the future
01:19:00 Convergence and reducing wealth gaps
01:23:00 Regulatory culture change and sandbox
01:25:00 Capital markets need to work for everyone
01:30:00 Closing remarks
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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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JOBS Act of 2012: Ten Years of Legalized Investment Crowdfunding
Crowdfund Insider | | Apr 5, 2022
NCFA: Congrats JOBS Act and to everyone who moved the needle back then and continues to move the needle now. This was the catalyst to peer to peer platform finance, emergence of 'arm chair dragons', VC as-a-service, and to the popularity and growth of AltFi and Fintech broadly
The JOBS Act of 2012 was signed into law by President Barack Obama ten years ago today, on April 5, 2012. In a rare moment of bipartisanship, Republicans and Democrats joined together to help private firms raise much-needed growth capital via online securities offerings.
Under the new rules, Regulation Crowdfunding (Reg CF), and Regulation D 506c were created. Regulation A (Reg A+) received a key update for a securities exemption that effectively no one used prior to the JOBS Act. Firms using these exemptions were initially able to raise up to $1.07 million using Reg CF and up to $50 million under Reg + – from both accredited and non-accredited investors. Reg D 506c, approved online capital formation from accredited investors. A new financial intermediary was created as well. Funding Portals, a new type of intermediary, are FINRA regulated platforms that are legally able to issue securities under Reg CF (along with regulated broker-dealers).
See: Crowdfunding is Now a Serious Way for Private Ventures to Raise Capital
Now, becoming law did not mean these new rules were immediately actionable. It took the Securities and Exchange Commission years to complete everything. It was only in mid-2016 that the SEC approved the final rules for Reg CF.
Last year, the SEC improved securities crowdfunding rules by raising the Reg CF funding cap from an anemic $1.07 million to $5 million – far more in line with seed rounds. Reg A+ got some attention too as issuers are now able to raise up to $75 million in a min-IPO type offering. There were other improvements too.
Today, securities crowdfunding platforms have raised over a billion dollars – creating new jobs and allowing younger firms – frequently outside established tech hubs – to raise growth capital.
Around the beginning of 2022, CI connected with Sherwood “Woodie” Neiss, Principal at Crowdfund Capital Advisors and a key proponent in the creation of the JOBS Act who was there when the bill was signed into law, said the industry is at a tipping point as investors backed startups at a record pace during 2021. Neiss said that the online capital formation sector is “accelerating as we’ve never seen” before.
Sep 2013: Why is September 24th a Huge Day for Entrepreneurs? Title II of the US JOBS Act and Crowdfunding for Accredited Investors Begins
We reached out to Neiss earlier today for his thoughts on the ten year anniversary of the JOBS Act, he shared:
“It is hard to believe that ten years ago today, we were sitting in the Rose Garden as President Obama signed Regulation Crowdfunding and the JOBS Act into law. Tearfully, I sat there as he called the work that we did walking the halls of Congress, lobbying, testifying, and negotiating the final framework for Investment Crowdfunding a “gamechanger.” Today, like a proud parent, I look over the industry data, and I see how thousands of innovative pre-IPO startups and small businesses all across the United States have been able to turn to a new pool of investors … the American people.”
See: US Investment Crowdfunding Exemptions Explained
“I’m humbled that it has already become a billion-dollar industry; how we delivered on what we promised: a balanced way for entrepreneurs to raise necessary money from willing investors while providing investors with the disclosures the regulators wanted them to see and guardrails to mitigate losses; and how it will forever change the way companies are funded going forward,” he added. “At the same time, I realize there is still much to do, and our work is not done. We will continue to be a champion for the industry, collaborate with the regulators and help scale our nation’s entrepreneurs so anyone with a great idea and a passionate group of investors can perhaps become the next unicorn!”
Continue to the full article --> here
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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Crowdfunding is Now a Serious Way for Private Ventures to Raise Capital
Crowdfund Insider | | Mar 22, 2022
Traditionally, only accredited investors, private equity firms, or major financial institutions have been able to invest in early-stage, high-growth companies before an initial public offering. While there are many VCs and angels out there, they hear many pitches, they have many options, their funding often makes up only part of what a start-up needs and can come with some significant strings attached.
But in March 2021, the U.S. Securities and Exchange Commission (SEC) changed a key regulation known as Regulation A, Tier 2, now enabling U.S. based companies to raise up to $75 million every 12 months from a wider range of investors, including retail investors. This was a major, under-reported addition to the startup founders’ toolkit.
See: On-chain capital is the future of startup funding
Blockchain and digital investor onboarding technology are now making it comparatively easy for founders to turn to retail investors in funding their still-privately held businesses, with shares issued in the form of tokens securely recorded on public blockchains such as Avalanche, Algorand, Ethereum, or permissioned chains if more privacy is needed. This can be a fundamentally better way to raise capital, and privately held companies and their customers are already taking notice.
Unlocking wealth creation
Gone are the days of Microsoft, Amazon, and Oracle, whose early IPOs were seen as opportunities for individual investors to share in unicorn-driven wealth. While an IPO used to be a sign that a company had “made it”, today it can just as easily be a sign of its decline. Creating a market for shares of private businesses before they go public can create both liquidity and eliminate the fall to earth that often follows an IPO.
Let’s explore why a Mini-IPO capital raise from individual investors can make sense for your business:
- A Mini-IPO allows you to raise capital directly from your existing customers and fans, creating an opportunity to deepen, cement and increase the value of those relationships.
- When your customers are also your shareholders, their interests become even more tightly aligned with yours.
- Because a Mini-IPO is an almost entirely digital process, you can perform one much faster and less expensively than a traditional IPO, since tasks previously performed by transfer agents, lawyers and other middlemen during business hours can be performed automatically by smart contracts in milliseconds.
- Issuing your shares on the blockchain also allows you to manage your shareholders digitally, with real-time investor cap tables, instantaneous reporting, and much tighter control over investor communications and rewards (more on that below).
See: US Investment Crowdfunding Exemptions Explained
- A Mini-IPO is a sector-agnostic solution. Whether you’re an established tech start-up, a consumer products company, in hospitality or real estate, you can turn to your customers for your next capital raise rather than relying on angels and VCs.
- This has other advantages, too: your customers are already invested in your business emotionally (as early adopters) and with their dollars. When they become shareholders, they are more likely to understand and stick with you through growing pains and can be involved in growing your business without the need to surrender control or board seats.
- Finally, a Mini-IPO can increase the liquidity of your shares since secondary markets now exist to trade these digital asset securities. Since businesses are remaining private longer than ever, founders and early investors traditionally need to wait approximately 10 years before finding liquidity. By creating the ability for individuals to invest and trade in your private company, no longer are you unable to sell shares to willing buyers when you need to buy a new house, put a kid through school, launch another start-up, or have unforeseen life events.
Continue to the full article --> here
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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US Investment Crowdfunding Exemptions Explained
Crowdfund Insider | JD Alois | Mar 11, 2022
In the United States, securities or investment crowdfunding was legalized under the JOBS Act of 2012. This bi-partisan legislation was in recognition of changes in technology as well as an understanding of the need to better facilitate capital formation for early-stage firms.
See: How Crowdfunding Can Support a Post-Covid World
Effectively, there are three main securities exemptions utilized in the US to raise money online. The below document is a high-level summary of the different exemptions (not legal advice).
- Regulation Crowdfunding or Reg CF
- Regulation A or Reg A+
- Regulation D 506c or Reg D 506c
Reg CF is an exemption that enables issuers to raise up to $5 million from anyone. Issuers must list the securities offering on a FINRA regulated Funding Portal or Broker-Dealer. Securities crowdfunding is still a young industry that continues to evolve. Last year, the SEC enabled several material changes to improve online capital formation.
Continue to the full article --> here
Download high level summary comparing exemptions --> here
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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Should I invest in real estate crowdfunding in Canada?
Guest Post | Dec 24, 2021
If you're looking for a way to invest in real estate in Canada without having to pay high prices, crowdfunding might be a great idea. This is especially the case with more expensive cities like Toronto, Montreal and Vancouver, where according to strawhomes.com, home values are above $2 million dollars in some cases. This type of investment platform allows many people to pool their money and buy a property in a shared manner.
What is Real Estate Crowdfunding?
Real estate crowdfunding involves investing in properties through a crowdsourcing platform. As an investor, you can invest in single-family residences, multifamily units, and commercial real estate. The real estate crowdfunding platform makes all of the necessary investments and manages them. Unlike REITs (Real Estate Investment Trusts), crowdfunded real estate doesn't require the owner of the property to sell it immediately to investors.
The investors are then given rights to voting, distributions, and other rights that are inherent to investing in real estate. These investors also earn profit from property appreciation and rental income.
While real estate crowdfunding is a new way to invest in real estate, it has some advantages. For example, Canadian investors can choose a particular project or a specific location. Some crowdfunding platforms specialise in commercial real estate, while others only focus on single-family residences.
Additionally, different platforms may require specific investor qualifications. For instance, CrowdStreet, one of the many real estate companies, is only open to accredited investors. Addy Investments is another type of firm that offers alternative investments pathways. The majority of other platforms allow you to pick the property you are interested in investing in, as long as you meet minimum investment requirements.
Is investing in crowdfunded real estate a wise choice?
Crowd funding can reduce barriers for real estate investors who want to invest in property and lower the management of financial responsibility. Real Estate investment opportunities should be carefully selected. Are they equity investments, or debt with high potential returns? Are there investment minimum amounts, or do investors have to fork out the entire investment? These will all determine how wise each option is for you - and what your annual return will be, as well as your risk.
Should I invest in crowdfunded real estate?
Before you invest in crowdfunded real estate, you should do your own research and know the risks involved. As retail investors, it's best to find real estate that you already have knowledge of, rather than buying it from a stranger. There are a few factors you should consider before investing. While crowdfunded real estate is not for everyone, it is an ideal way to get started in real estate. It requires lower initial investment amounts, which means the risks are low. If you are not confident about your skills and knowledge, you should create a risk profile assessment and decide whether it's right for you.
How Can You Start in Real Estate Crowdfunding?
The initial investment required for crowdfunding real estate is typically $500 or less minimum investments. Many of the crowdfunded real estate platforms have automatic allocation options so you can make an investment whenever you have the money. The platform will also keep track of your investment properties and give you reports with pie charts. Depending on the rules of the investment committee, you can choose the type of investment opportunity property you are interested in and then invest your funds accordingly right from your online investment platform. You should also take the time to learn about the investment strategies and the properties, and their respective real estate market and to determine if it is a good or a risky investment.
One of the largest crowdfunding real estate platforms is Fundrise.
They have more than 170,000 investors and have over $4 billion in assets. Their investors own a percentage of each investment and receive quarterly dividends and appreciation of their share price. The platform does all of the investing work into the diverse housing market areas, which helps keep the investment costs low. The average annual return is eight to twelve percent, and in some cases, even higher annual return - depending on the real estate companies' schedule and which real estate properties are being handled.
The most common type of real estate crowdfunding is auto-investing.
These platforms allow investors to invest in real estate without the need to perform a detailed analysis. These investment platforms allow investors to set their investment criteria and have funds allocated automatically to them and to their investment dollar. The majority of real estate crowdfunding is auto-investing, which makes it a popular choice for those with little or no experience in the industry providing better investment return (read safer returns on the entire investment). If you have no idea about the industry, auto-investing is the best option for you.
Can You Make Money from Crowdfunding?
This type of investment also gives you different opportunities to profit. Some deals are passive, involving renting out the property to tenants. Others are "flipping," requiring you to renovate and improve the property in order to increase its value. There are many benefits to investing in this type of real estate.
Earn passive income
The main advantage of real estate crowdfunding is the potential for long-term gains. Passive investors love this option. While many deals feature short-term fix-and-flip options, there are also long-term development opportunities that offer high returns. Some of these projects are designed to resell the properties as soon as they are completed, while others are meant to provide monthly income and hold on to the initial investment for a longer period of time.
See: 3 Trends in 2022 Predicted to Shape Investment Crowdfunding
In addition, you'll receive regular rental income from the property, and you'll also be able to rent it out to tenants. The prices of commercial properties and residential properties in British Columbia and Ontario are expected to increase over the next five years, making this a lucrative opportunity for both individual investors and accredited ones.
Potentially very high returns
Crowdfunded real estate investment is an excellent option for passive income, as it allows you to take advantage of double-digit returns, which are a combination of capital appreciation and rental income.
This type of investing allows people to accumulate wealth faster and more easily by all potential investors. You don't have to be a millionaire to take advantage of this opportunity. You can even invest in a project with very low minimums and enjoy the financial rewards for years to come, especially during a bull market like the ones we are experiencing.
What Type of Real Estate is Crowdfunded?
Most of the funds raised up to now have been used to develop residential properties, like multi-family structures as well as for "fix and flips." Markets like Arizona, Texas, California and Florida have witnessed a lot of investment interest from investors in renovations that are sold in relatively short periods to yield high investment returns. Does this continue to be the case in BC where the majority of value lies in the land rather than the structure? We'll have to wait and see.
Benefits for Investors
Another benefit of crowdfunding is the ability to diversify your investments. If you make a single investment, you may end up losing your entire money. With real estate crowdfunding, you can spread your money among several investments. By dividing your investment, you spread your risk. If one of the investments fails, you won't lose the entire amount. In contrast, if you have five investments, you'll only lose $100,000 if only one of them fails.
Risks
While crowdfunding offers a great way to invest in real estate, you should be aware of the downsides. For instance, you risk losing liquidity. In addition, if the economy is weak, the market may decline and your investments will lose value.
Remember that it is very illiquid. Even if the investment is not as risky as it sounds, it is important to know the risks of crowdfunded real estate. You should only invest in a property that you can afford to hold for a long time.
See: Reg CF: Investment Crowdfunding Tops $1 Billion on Heals of Funding Cap Increase
As long as you know the risks and rewards of the investment, you should consider using this method to invest in real estate. There are many pros and cons to real estate investing, but it is important to remember to read about these before you commit your money.
Conclusion
There is little to no doubt from our research that the potential for crowd capital across all industries, including real estate is significant. Real estate is still lagging in the development of markets because of the strong traditional financing options regulations, and to a lesser extent our business culture of a conservative nature. The final size of the market will be determined by a variety of aspects, but the positive is that the critical mass is increasing within Canada to support equity crowdfunding.
Does culture kill the equity crowdfunding market in Canada? We believe that the answer is no. What are your thoughts? We would love to hear your thoughts and suggestions.
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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What Are Some of the Best Canadian Real Estate Crowdfunding Platforms?
First National Realty Partners | Roni Davis | Jan 31, 2022
If you are looking for ways to invest in real estate, using a crowdfunding investment platform might be your best option. Luckily, there are a few Canadian crowdfunding investment platforms that act as a bridge between real-estate opportunities and eager investors. Before exploring different crowdfunding platforms available to Canadians, let's define some terms!
What is Crowdfunding?
Crowdfunding as an investment strategy has been around for a long time. An individual investor has a limited amount of capital to invest with. This puts expensive commercial real estate investments out of reach for all but the wealthiest of individual investors. However, a bunch of individual investors can pool their capital to invest together in a property. This is the crowdfunding investment strategy – it allows smaller investors to get a piece of larger investments.
What is a Real Estate Crowdfunding Platform?
Real estate crowdfunding platforms serve as the marketplace between investors and investment opportunities. Essentially, these platforms help investors find attractive opportunities to invest in.
What do Real Estate Crowdfunding Platforms do?
These platforms perform many of the critical tasks that are necessary to invest successfully in commercial real estate. Individual investors often do not have the time and resources to perform the essential research, engage in the grueling recruitment of other investors, and manage the legal contracts, paperwork, and other laborious details usually involved in commercial real estate investing.
Successful commercial real estate investing requires the dedicated labor of full-time, professional investors. Crowdsourcing platforms will charge investors a fee that pays teams of professional investment strategists and account managers to handle all of the hard work that commercial real estate investing requires.
These crowdfunding platforms make investing in commercial real estate much easier for the average investor because they handle the hard work.
What Are Some Canadian Real Estate Crowdfunding Platforms?
Canada generally has stricter regulatory laws than its neighbor down south. Because these regulatory laws are more stringent and can vary between province and territory, the landscape can be confusing to navigate for the average investor.
Many popular crowdfunding platforms do not operate in Canada because of these restrictions. This lack of foreign competition has led to some high-quality home-grown Real Estate Investment Platforms.
Let’s explore some of these options:
NexusCrowd
This crowdfunding investment platform is considered the most viable Canadian alternative to popular platforms like Fundrise and CrowdStreet. NexusCrowd partners with highly-vetted and successful institutional investment firms to offer their users high-quality investment opportunities.
NexusCrowd also has a significant role in professionally managing their investment opportunities. They only partner with institutional investors who meet their high standards and perform their own due diligence before an opportunity is posted on their platform.
See: $100M Crowdfunding Deal: Republic acquires the UK’s Seedrs for European expansion
The minimum investment is relatively expensive, coming in at $10,000. This puts NexusCrowd out of reach of smaller investors and acts as a paywall, ensuring investors are committed to their investments. Also, investors must be accredited, which means the average person cannot invest with NexusCrowd.
NexusCrowd only curates opportunities that have already reached 50% funding, making investing with NexusCrowd lower risk. Customers can also choose specific properties to invest in, giving them a tangible, physical quality to their investments.
However, if the $10,000 minimum puts NexusCrowd out of reach, there are other more affordable crowdfunding platforms to explore.
addy Invest
If you are more of a casual investor, then addy might be the platform for you. Investors do not need accreditation, which opens up investment opportunities for many Canadians. In fact, addy markets itself as an investment platform for everyday people who might otherwise not be able to afford to get into real estate investing.
Like NexusCrowd, users invest in specific properties, giving their investments a certain tangibility. The minimum investment amount is an astoundingly low $1. However, addy caps investments per property at $1,000 for unaccredited investors.
Addy offers an attractive deal for the average person looking to get started in real estate investing. It is a great foot-in-the-door option for new retail investors to explore the world of real estate investing.
Fundscraper
Fundscraper is a unique alternative to crowdfunding platforms like NexusCrowd and addy. The previous platforms allow investors to choose the specific properties they want to invest in, giving them more freedom but exposing them to higher risk in the process because investment portfolios are not diversified.
Fundscraper offers specific properties for users to invest in but also offers more diversified REITs and real estate ETFs. REITs and ETFs invest in real estate developers, management companies, and other investment companies. These companies are publicly traded and can be invested in like stocks.
See: 3 Trends in 2022 Predicted to Shape Investment Crowdfunding
The minimum investment for Fundscraper is $5,000, making it an attractive compromise between NexusCrowd and addy.
What Real Estate Crowdfunding Investment Platform is Right For You?
When deciding on a real estate investment platform, you need to consider your aversion to risk, how hands-on you’d like to be with your investments, and how much you can invest. You should never invest more than you are willing to lose, as there is always a level of risk associated with investing.
About the Author
Roni Davis is a real estate investor, blogger, and legal assistant who writes for First National Realty Partners.
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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How Crowdfunding Can Support a Post-Covid World
Bennett Milner Williams Consulting Ltd. | Victoria Bennett | Jan 27, 2022
We are all in the COVID sea, but each of us is on different ships. Companies that rely on face-to-face contact, such as accommodation and food services, have been negatively impacted, whereas online delivery has seen significant growth. The CFIB Small business recovery dashboard shows that as of 19th August 2021, 76% of small businesses are fully open, with 47% fully staffed and 39% at normal sales. The data doesn't show the massive variation within respondents, but it is fair to say, sales for small businesses are, overall, way down.
Women have been disproportionately affected by COVID
McKinsey has been sharing their weekly view on the impact of COVID. Their analysis has shown that although women make up 39% of global employment, they have experienced 54% of overall job losses. Women have been disproportionately represented in industries that have declined due to COVID. Much of the job creation focus has been in male-dominated industries such as communication and construction.
The National Angel Capital Organisation’s (NACO) 2021 report on Angel Investing highlighted the research in Crunchbase's 2020 report. It found that 20% of global startups were woman-founded, but women were less likely to seek and receive financing than men (32.6% vs. 38%). Businesses owned by men are more likely to receive venture capital, angel funding and other forms of leverage such as trade credit and capital leasing. Concerningly, Crunchbase 2020 data shows that the proportion of dollars to women-only founding teams declined, to 2.3%, compared to 2.8% in 2019. Underrepresented organizations, including Black and Indigenous founders, also receive less capital.
See:
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3 Trends in 2022 Predicted to Shape Investment Crowdfunding
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How Covid has kickstarted Canadian fintech
The reduction in investment in women-only businesses is worrying since women have been disproportionately affected by COVID. The negative impact for women in business during this time has been exponential in nature. It is a double whammy.
I recall speaking at the Global Crowdfunding Conference in 2016 on the increased success for women and underrepresented organisations through crowdfunding. The PWC data supported these findings a year later, with 17% of male-led campaigns reaching their finance target, compared with 22% of female-led campaigns. Overall, campaigns led by women were 32% more successful at reaching their funding target than those led by men, data seen across multiple sectors, geographies and cultures. ESMT's data in 2019, again, backed this up.
If you are curious, the drivers for success include the ability to tell stories that engage potential investors and the ability to multi-task, as it is not one tool that leads to an investment. These skills are often seen well expressed in women.
COVID has changed business permanently
COVID has accelerated change. We've had a lifetime of social change in less than two years. COVID-driven change has opened up opportunities, and if I can say the overused phrase, the opportunity to pivot and create businesses that meet people's new needs. 92% of small businesses have pivoted in at least one way, but many have pivoted in multiple ways. Only 8% did not pivot their business at all to adapt to the current environment.
The biggest challenge for small businesses has been the lack of skills for the new approach. Followed by a scarcity of funds to make the changes needed to survive, thrive or grow.
Crowdfunding’s role in raising capital in a post COVID world
Crowdfunding can play a crucial role to address the capital gap for businesses. We need to raise awareness of crowdfunding in companies looking to pivot and capitalise on the new opportunities—investment in new businesses and investment in women-led, black, and indigenous founders.
Just as we discussed the different journeys each of us has had in the COVID sea, we've also seen different financial impacts. Households in Canada have increased their net savings due to government support and reduced spending. At the same time, the comfort in online financial transactions has increased. Crowdfunding breaks the barriers so that all Canadians, not just the wealthiest, can invest in companies. This releases capital to invest in businesses to help them pivot and capitalise on the new opportunities.
See: Fintech Fridays EP56: How We Raised $426 million Using Rewards Crowdfunding
The capital available for crowdfunding was already pretty buoyant. The transaction value in the Canadian Crowdfunding segment is projected to reach US$23.1m in 2021.
- Transaction value is expected to show an annual growth rate (CAGR 2021-2025) of 1.61% resulting in a projected total amount of US$24.6m in Canada by 2025.
- Even though Canada is a relatively large player in the alternative finance space, our Southern neighbour, the US, still leads with a projected $1.2b in total transaction value in 2020. Even with our new harmonised regulations, due in September, Canada's regulations lag behind the US, but that is a separate article.
Our two most recent contracts are with visible minorities, one is a women led and indigenous business. Both are excellent businesses that meet a need in the marketplace. Through crowdfunding they will benefit from growing their awareness and customer base. Crowdfunding has also opened up access to capital for both companies.
Governments have spent a significant amount of money to sustain people and businesses through the COVID crises. But it hasn't been enough to build new businesses and create jobs to replace those lost. The taps will start to be turned off soon. The capital available through crowdfunding can be used to build business and employ the most impacted. I hope the provincial securities commissions and the government will leverage the new harmonised regulations to encourage new companies and new investors.
About the Author
Victoria Bennett, FCIM, BSc(Hons)
Victoria is an NCFA ambassador and Principal of the crowdfunding agency, Bennett Milner Williams Consulting Ltd. She founded The Crowdfunding Hub to provide broader access and support to organisations raising capital through crowdfunding and is a passionate believer in the democratisation of capital through crowdfunding.
This article is featured in NCFA's digital magazine, Fintech Confidential (Issue 4). Click to read the latest thought leadership, insights and trends about Fintech in Canada:
Checkout NCFA's digital magazine, Fintech Confidential (Issue 4) --> here
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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