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
Canadian securities regulators publish crowdfunding exemption
International Law Office by Stephen P Robertson and Pascal de Guise | December 2, 2015
Introduction
On November 5 2015 the securities regulatory authorities in Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia published, in final form, Multilateral Instrument (MI) 45-108 – Crowdfunding. The instrument includes a crowdfunding prospectus exemption and a registration framework for funding portals to allow start-up and early-stage companies to raise capital.
The final form of the crowdfunding exemption resulted from consultations following publication of proposed MI 45-108 on March 20 2014.
The crowdfunding regime under MI 45-108 will coexist with the start-up crowdfunding exemptions implemented by way of harmonised blanket orders in British Columbia, Saskatchewan, Manitoba, Quebec, New Brunswick and Nova Scotia.(1) As a result, two different crowdfunding regimes in Canada will apply to varying groups of issuer, some of which will overlap. Promoters of crowdfunding may be disappointed by the coexistence of two different crowdfunding regimes, given the Canadian consensus on the need for harmonised private placement rules.
Related:
-
Regulators including OSC Publish Crowdfunding Exemption and Registration Framework for Funding Portals
-
ASC and Nunavut Securities Office Publish Proposed Start-up Business Exemption for Comment
-
New “Start-up” Crowdfunding Exemptions Adopted in Some Canadian Jurisdictions
Provided that all necessary ministerial approvals are obtained, MI 45-108 will come into force in the participating jurisdictions on January 25 2016. The Financial and Consumer Affairs Authority of Saskatchewan is to republish MI 45-108 for a 60-day comment period.
Crowdfunding
'Crowdfunding' generally refers to a method of funding a project or venture through small amounts of money raised from a large number of people, typically through an internet portal acting as intermediary. The securities-based model of crowdfunding is the practice of the crowd investing in an issuer in exchange for the issuer's securities, which are often equity securities but may include other types of securities, including debt securities. The objective of the crowdfunding regime under MI 45-108 is to enable businesses to raise capital online, through a registered funding portal, while maintaining an appropriate level of investor protection and regulatory oversight.
Crowdfunding exemption
The crowdfunding exemption is available to reporting issuers and non-reporting issuers that are incorporated or organised under the laws of Canada or a jurisdiction of Canada. To be an eligible crowdfunding issuer, MI 45-108 permits the principal operating subsidiary of an issuer to be incorporated or organised under the laws of Canada, a jurisdiction of Canada, the laws of the United States or a jurisdiction of the United States.
Type of security
Issuers can offer only non-complex securities, including:
- common shares;
- non-convertible preference shares;
- securities convertible into common shares or non-convertible preference shares;
- non-convertible debt securities;
- units of a limited partnership; and
- flow-through shares under the Income Tax Act.
Investment limit
In the participating jurisdictions, a purchaser that is not an accredited investor is subject to an investment limit of C$2,500 per distribution, and in Ontario such purchaser is also subject to an annual investment limit of C$10,000 for all distributions made in reliance on the crowdfunding exemption in the same calendar year. In all participating jurisdictions, an accredited investor is subject to an investment limit of C$25,000 per distribution, and in Ontario an accredited investor is also subject to an annual investment limit of C$50,000 for all distributions made in reliance on the crowdfunding exemption in the same calendar year. In Ontario, an investor that is a 'permitted client' (as defined in National Instrument 31-103 – Registration Requirements, Exemptions and Ongoing Registrant Obligations) is not subject to an investment limit.
Issuer group limit
Issuers are not permitted to raise more than C$1.5 million under the crowdfunding exemption within the 12-month period ending on the last day of the distribution period.
Offering documents and advertising
Issuers must prepare an offering document, based on the form prescribed in MI 45-108, that contains certain information about the issuer, the issuer's business and management, the distribution and the funding portal, and informs potential investors of their rights. An issuer cannot, directly or indirectly, advertise a distribution or solicit purchasers under the crowdfunding exemption. However, the issuer may inform purchasers that it proposes to distribute securities under the crowdfunding exemption and may refer purchasers to the funding portal facilitating the distribution.
Liability for materials
Issuers are subject to liability for misrepresentations or untrue statements of material facts contained in the crowdfunding offering document and other permitted materials, and investors are provided with a related right of action.
Ongoing disclosure requirements
Non-reporting issuers must make available to investors:
- annual financial statements;
- a notice of use of proceeds; and
- in New Brunswick, Nova Scotia and Ontario, notice of:
- a discontinuation of the issuer's business;
- a change in the issuer's industry; or
- a change of control of the issuer.
Reporting issuers must continue to comply with their disclosure requirements, under National Instrument 51-102 – Continuous Disclosure Obligations.
Investor protections
Investors must complete a risk acknowledgment form requiring them to confirm positively that they have read and understood the risk warnings and information in the crowdfunding offering document before they may enter into an agreement to purchase securities.
Resale restrictions
Securities of a reporting issuer acquired under the crowdfunding exemption are subject to a four-month hold period. Securities of a non-reporting issuer cannot be resold in a jurisdiction:
- until the issuer becomes a reporting issuer and certain other conditions are met; or
- unless the sale is made under another available prospectus exemption.
Concurrent distributions
An eligible crowdfunding issuer may distribute securities under other prospectus exemptions (eg, the accredited-investor exemption or the offering-memorandum exemption) during the distribution period. Securities distributed under other prospectus exemptions need not have the same price, terms and conditions as those distributed under the crowdfunding exemption.
Related: Entrepreneurs turning to equity crowdfunding as provinces loosen rules
Funding portal requirements under MI 45-108
Issuers may distribute securities only through a single funding portal that is registered as an investment dealer, exempt market dealer or restricted dealer as outlined in MI 45-108.
A funding portal must fulfil certain gatekeeper responsibilities before granting an issuer access to its online platform, which include:
- reviewing the issuer's disclosure in the crowdfunding offering document and other permitted materials for completeness, accuracy and any misleading statements;
- conducting background checks on the issuer and its directors, executive officers and promoters; and
- denying an issuer access to the funding portal in certain circumstances.
Additional requirements are imposed on restricted dealer funding portals. In Ontario, a restricted dealer funding portal is only allowed to distribute securities under the crowdfunding exemption, as the start-up exemption is not currently available in this jurisdiction. In participating jurisdictions other than Ontario, this type of funding portal will be permitted to act as an intermediary in connection with securities offerings under both exemptions.
Funding portals are prohibited from offering securities of a related issuer and may not directly or indirectly advertise a distribution or solicit purchasers under the crowdfunding exemption. Issuers may post the offering document and other permitted materials solely on that funding portal's online platform.
Crowdfunding in the United States
On October 30 2015 the US Securities and Exchange Commission (SEC) adopted the final rules to permit equity crowdfunding in the United States. The SEC adopted Regulation Crowdfunding under the Securities Act 1933 and the Securities Exchange Act 1934 to implement the requirements of Title III of the Jumpstart Our Business Start-ups Act. Regulation Crowdfunding also provides a framework for the regulation of registered funding portals and broker dealers that issuers are required to use as intermediaries in reliance on the crowdfunding exemption. Non-US companies will not be eligible to use the Regulation Crowdfunding exemption. The final rules will be effective 180 days after publication in the Federal Register.
Related: SEC Approves Title III of JOBS Act, Equity Crowdfunding with Non-Accredited
The crowdfunding regime under MI 45-108 encompasses many of the investor protection elements of the crowdfunding exemption under Regulation Crowdfunding. The table below compares the key requirements under both MI 45-108 and Regulation Crowdfunding.
| MI 45-108 | Regulation Crowdfunding | |
| Investment limits | Individual investors are subject to an investment limit of C$2,500 per distribution (in Ontario, such purchasers are also subject to an annual investment limit of C$10,000 for all distributions made in reliance on the crowdfunding exemption).
Accredited investors are subject to an investment limit of C$25,000 per distribution (in Ontario, an accredited investor is also subject to an annual investment limit of C$50,000 for all distributions made in reliance on the crowdfunding exemption). |
Individual investors, over the course of a 12-month period, are permitted to invest in the aggregate across all crowdfunding offerings up to:
During the 12-month period, the aggregate amount of securities sold to an investor through all crowdfunding offerings may not exceed US$100,000. |
| Issuer group limit | An issuer is permitted to raise a maximum aggregate amount of C$1.5 million through crowdfunding offerings in a 12-month period. | An issuer is permitted to raise a maximum aggregate amount of US$1 million through crowdfunding offerings in a 12-month period. |
| Ongoing disclosure requirements | Non-reporting issuers are required to disclose the following to investors:
Reporting issuers must continue to comply with their disclosure requirements under National Instrument 51-102 – Continuous Disclosure Obligations. |
The issuer must disclose the following to investors:
|
| Resale restrictions | Securities purchased in a crowdfunding transaction generally cannot be resold for four months. | Securities purchased in a crowdfunding transaction generally cannot be resold for one year. |
Funding portal requirements under Regulation Crowdfunding
Regulation Crowdfunding transactions must take place through an SEC-registered intermediary – either a broker dealer or a funding portal. Under Regulation Crowdfunding, offerings must be conducted exclusively through a platform operated by a registered broker or a funding portal, which is a new type of SEC registrant. The rules require these intermediaries to:
- provide investors with educational materials;
- take measures to reduce the risk of fraud;
- make available information about the issuer and the offering; and
- provide communication channels to permit discussions about offerings on the platform and facilitate the offer and sale of crowdfunded securities.
The rules prohibit funding portals from:
- offering investment advice or making recommendations;
- soliciting purchases, sales or offers to buy securities offered or displayed on its platform;
- compensating promoters and others for solicitations or based on the sale of securities; and
- holding, possessing or handling investor funds or securities.
See the original article --> here
The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more About Us or visit ncfacanada.org.
New crowdfunding regime adopted by five provinces
Dentons | November 24, 2015
On November 5, 2015, securities regulators in five provinces published in final form Multilateral Instrument 45-108 Crowdfunding (MI 45-108) setting out rules that will provide a new way for businesses to raise capital over the internet. The rules are aimed at facilitating small investments made through online portals, a practice that has become known as “equity crowdfunding”. The regulators anticipate that the regime will be of greatest use to small- and medium-sized businesses, including both reporting and non-reporting issuers.
The five provinces that are implementing the new rules are Manitoba, Ontario, Québec, New Brunswick and Nova Scotia, and are referred to herein as the “participating provinces”. The planned effective date is January 25, 2016.
Background
Any offering of securities must either be qualified by a prospectus or be exempt from the prospectus requirement. In addition, if the offering involves an intermediary—such as a broker or a dealer—that intermediary must either be registered in such capacity or be exempt from the requirement to register.
Related: Regulators including OSC Publish Crowdfunding Exemption and Registration Framework for Funding Portals
MI 45-108 introduces a prospectus exemption for equity crowdfunding in the participating provinces, subject to a number of conditions. There is no associated registration exemption, which means that any funding portal involved in an offering under the exemption must be registered. The MI 45-108 prospectus exemption will be available to both reporting and non-reporting issuers or, in non-technical parlance, to businesses both public and private.
The MI 45-108 prospectus exemption should be considered in light of the “Start-Up Crowdfunding Exemption” implemented by six provinces in May of this year, as described in a previous Insight. Those provinces—being British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick and Nova Scotia—adopted exemptions from the prospectus and registration requirements for equity crowdfunding transactions to supplement other prospectus exemptions currently used by online platforms in Canada, such as the accredited investor exemption.1 In contrast to the crowdfunding prospectus exemption under MI 45-108, the Start-Up Crowdfunding Exemption is available only to non-reporting issuers. The interplay between the MI 45-108 prospectus exemption and the Start-Up Crowdfunding Exemption is discussed further below.
Details of the MI 45-108 prospectus exemption
The principal conditions of the MI 45-108 prospectus exemption are summarized below.
Investment limits
The limits on investment under the MI 45-108 prospectus exemption focus on both investors and issuers. Investors will be limited to $2,500 per investment and, in Ontario, $10,000 per calendar year (all figures CA$), unless they satisfy certain asset and income tests. Those that meet such tests and are therefore considered “accredited investors” may invest up to $25,000 per investment and, in Ontario, $50,000 per calendar year. In Ontario, investors who meet even higher thresholds—qualifying them as “permitted clients”—are not subject to an investment limit.
Related: The Real Data on Equity Crowdfunding Performance
An issuer, together with any other person in the “issuer group,” can raise a maximum of $1.5 million per 12-month period. “Issuer group” includes affiliates of the issuer.
Documentation requirements
Issuers using the MI 45-108 prospectus exemption must provide investors with an offering document containing prescribed information about the issuer and the offering including, among other things:
- Financial statements, which must be audited if the issuer has completed a financial year; and
- A statement that investors will be able to rescind their investment or sue for damages in the event of a misstatement in the offering document or other materials associated with the investment.
Investors will be required to sign a form acknowledging that the investment is risky.
Advertising and solicitation
An issuer using the MI 45-108 prospectus exemption must not advertise a distribution of securities, though it may inform prospective purchasers of its intention to distribute securities and refer the person to the applicable funding portal.
Continuous disclosure
After completing a distribution under the MI 45-108 prospectus exemption, issuers will have to continue to provide investors with certain information about the business. Reporting issuers must observe their existing disclosure obligations. Non-reporting issuers will have to make annual financial statements “reasonably available” to investors within 120 days of the issuer’s year-end, together with a description of the use of proceeds.2 In Ontario, New Brunswick and Nova Scotia, a non-reporting issuer will also have to notify investors of certain issuer events, namely a discontinuation of its business, a change of its industry or a change of control.
Requirements for funding portals
A distribution under the MI 45-108 prospectus exemption must be made through a single funding portal, which must be registered as a dealer.3 The offering document and any other permitted materials must be posted only on that portal’s online platform.
Funding portals are subject to a number of requirements, including those applicable to other registered dealers. Other rules include a prohibition on advertising or general solicitation of investors; a requirement to conduct certain background checks on the issuer and its key individuals; and an obligation to terminate a distribution if it appears that the business of the issuer is not being “conducted with integrity”.
Other conditions
The MI 45-108 prospectus exemption is available only to issuers incorporated or organized in Canada, and having their head office and a majority of directors located in Canada. In addition, if the issuer has a principal operating subsidiary it must be incorporated or organized in Canada or the United States. The exemption is not available to investment funds, it cannot be used to offer complex securities, and proceeds of a distribution may not be expended to invest in, merge with or acquire an unspecified business. Issuers must maintain certain records for a period of eight years following the distribution.
Impact of the MI 45-108 prospectus exemption
The conditions to the MI 45-108 prospectus exemption, summarized above, are fairly onerous, particularly in light of the applicable investment limits. As such, there is uncertainty as to whether this exemption will be used with any frequency. In order to gauge its popularity, however, two other recent developments in securities law should be borne in mind.
The first is that, as noted above, the MI 45-108 prospectus exemption complements the Start-Up Crowdfunding Exemption in all participating provinces but Ontario. As such, non-reporting issuers may conduct a distribution under both exemptions in Manitoba, Québec, New Brunswick and Nova Scotia; a concurrent distribution in Saskatchewan and British Columbia under the Start-Up Crowdfunding Exemption; and another concurrent distribution in Ontario under the MI 45-108 prospectus exemption, assuming all conditions are satisfied. The investment limits under the Start-Up Crowdfunding Exemption are also low, at $1,500 per investor and $250,000 in aggregate, but the addition of those amounts may increase the viability of a distribution under the MI 45-108 prospectus exemption.
View: ASC and Nunavut Securities Office Publish Proposed Start-up Business Exemption for Comment
The other relevant development relates to the offering memorandum prospectus exemption, which has recently been adopted in Ontario and amended in several other provinces, as described in our recent Insight. The obligations of an issuer under that exemption are roughly similar to the obligations under the MI 45-108 prospectus exemption, while the investment limits are considerably higher. In addition, the offering memorandum exemption applies across Canada, if with some variation. Those facts may compel issuers interested in raising funds from the “crowd” to conduct offerings by way of the offering memorandum exemption, rather than the exemptions that are specifically designed for equity crowdfunding.
References
1 Alberta and Nunavut recently published for comment a separate proposed prospectus exemption for equity crowdfunding, as described in another recent Insight. Saskatchewan has published the MI 45-108 prospectus exemption for comment.
2 The notice of use of proceeds need not be provided in any year after the proceeds of a financing under the MI 45-108 prospectus exemption have been fully expended and investors have been notified of the use of proceeds.
3 The applicable categories of registration are investment dealer, exempt market dealer and restricted dealer, although a firm registered as a restricted dealer may not be registered in any other category and, in Ontario, may not be affiliated with another registered firm.
This article was co-authored by Daniel McElroy, Knowledge Management Lawyer in Dentons’ Vancouver office.
View the original article --> here
Hear Dentons speak about Compliance with Equity Crowdfunding Regulations at our Calgary Crowdfunding Bootcamp on Thursday, Dec. 3
The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more About Us or visit ncfacanada.org.
NCFA Hosts Calgary Crowdfunding Bootcamp to Ignite Entrepreneurship and the Innovation Economy
NCFA Press Release | Craig Asano | Nov 24, 2015
CALGARY, Nov. 24, 2015 /CNW/ - The National Crowdfunding Association of Canada (NCFA) announced today that it is highly supportive of the Alberta Securities Commission's proposed Start-up Business Exemption (multilateral instrument 45-109), which would supercharge the growth and development of nascent companies in the province.
"NCFA is pleased to be assisting the Alberta Securities Commission (ASC) and the Alberta Government in facilitating public comments and consultations pertaining to the ASC's proposed Start-up Exemption at the NCFA's December 3rd Crowdfunding Bootcamp in Calgary," said Craig Asano, Executive Director of the NCFA who added, "We are expecting another sold out educational event with over 20 expert speakers, which is testimony to the huge interest there is in the province and across the country in crowdfunding, which is becoming the fastest-growing capital raising tool of the 21st century."
Since 2012, NCFA has been supporting the growth of a strong, vibrant, and inclusive crowdfunding ecosystem in Canada with a growing national base of 1300 members who run the gamut from equity, rewards, and lending marketplaces to issuers, investors and providers. It has brought together key stakeholders for discussions around securities crowdfunding in BC, Ontario, Saskatchewan and several other provinces that have now adopted rules to allow alternative finance markets to fill a crucial funding gap at early stages of the capital raising ecosystem while opening up participation to retail investors, and is working to build a robust and transparent infrastructure for the industry.
See: ATB Financial prepares Alberta-focused crowdfunding platform
"We note with interest that several provinces, including Ontario, Québec and British Columbia have already enacted crowdfunding-specific exemptions aimed at helping new ventures access equity and debt financing from these innovative and emerging online capital markets," said Mr. Asano.
The NCFA is working hard to deliver programs for industry participants and governments to be better informed about how Canada can, collectively, maximize the economic and social potential that is inherent in crowdfunding. In this regard, events from the Calgary Crowdfunding Bootcamp on December 3 to the 2nd annual Canadian Crowdfunding Summit in Toronto on March 3 are playing a vital role in ensuring that our country is at the forefront of the financial innovation that is crowdfunding.
View: source
# # #
Links:
Dec 3 Calgary Crowdfunding Bootcamp
Mar 3 Canadian Crowdfunding Summit
The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more About Us or visit ncfacanada.org.
For further information: Media Inquiries: Craig Asano, Executive Director, 416-618-0254, casano@ncfacanada.org
RealtyMogul Completes “Industry Breakthrough” Full Capital Stack Debt and Equity Combo
Crowdfund Insider | By | Nov 23, 2015
On Monday, online marketplace for real estate investing, RealtyMogul, announced a full capital stack transaction combining debt and equity with the successful purchase of a 112-unit apartment community, Bristol Park Apartments, in Fayetteville, NC.
Bristol Park Apartments, located six miles southwest of the US Army Base Fort Bragg, is 95 percent occupied, has new construction, with spacious floor plans that include 9-foot ceilings, large kitchens, walk-in closets, and fireplaces. Anchored by Fort Bragg, the largest US Army base by population, the soldiers receive a “basis allowance for housing,” which is greater than the in-place rents in the property. The transaction also includes a 7.6-acre lot at the rear, which was acquired alongside the apartment building in this transaction.
RealtyMogul funded $7.59 million in bridge financing and raised $1.5 million in joint venture equity for a total of 90 percent of the $10.12 million purchase price through both debt and equity. The Sponsors, Evolution Estate Partners and Triumph Management Group, plan to phase out the lease-up concessions and sell the property within five years.
See:
-
Canada’s first crowdfunded real estate deal closes
-
Part III: Is Culture Killing Equity Crowdfunding in Canada: Real Estate Spotlight
Jilliene Helman, CEO of RealtyMogul, stated:
“Our vision at RealtyMogul.com is to simplify real estate and be a one-stop shop for both equity capital and debt capital – this transaction highlights the power of our platform and provides a roadmap for us to be the leader in financing the full capital stack for commercial real estate. We’re excited to partner with Evolution Real Estate Partners and Triumph Management Group and excited about the plans for this 112-unit apartment complex.”
Continue to the full article --> here
The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more About Us or visit ncfacanada.org.
The Real Data on Equity Crowdfunding Performance
AltFiDATA | Ryan Weeks | Nov 19, 2015
We now have some insight into the state of companies that have to date raised money in the UK through the medium of equity crowdfunding.
The alternative finance industry is famed for its transparency. However, to put it mildly, there are certain segments of the space that warrant that reputation, and others that do not. The UK equity crowdfunding industry is undoubtedly a force for good in terms of its capacity for channeling much needed funding into the nation’s startup community. But the sector has come under fire during the past 12 months. Investor protections – in terms of the share classes on offer, gaudy valuations, pre-emption rights, and so on – have caused concern amongst industry observers. Perhaps most often evoked has been the issue of opacity. Tracey McDermott, acting Chief Executive of the FCA, was grilled on the alternative finance sector by the Treasury Select Committee a few weeks ago. Chris Philp MP asked the FCA boss for numbers relating to the losses that have to date been suffered by equity crowdfunding investors. McDermott had no choice but to admit that such data did not exist. Were she asked the same question today, the answer would be different.
AltFi Data this morning unveiled the first serious attempt to ascertain the current status of the 367 companies that have (at some point since the industry’s inception in 2011) received funding from one of the UK’s 5 major equity crowdfunding platforms. The FT covered the report launch, choosing to lead with the headline: “One in five UK crowdfunding investments fail”. The flipside of that, of course, is that 4 do not – and that to me seems the more significant angle.
See:
-
Your Input Required: 2015 Canadian Crowdfunding Platform Survey
-
The University of Cambridge & University of Chicago Launch the 2015 Americas Alternative Finance Benchmarking Survey
The gathering of industry participants, commentators and press at this morning’s launch event was welcomed by Sam Robinson, a partner at Nabarro, which supported the report. The audience were then walked through the highlights of the report by AltFi Data Co-Founder Rupert Taylor. These included the following:
- Over 80% of the companies that crowdfunded between 2011 and 2013 are still trading.
- The cohort of companies funded in 2013 provides the most representative sample for analysis. It contains enough companies (82) to be statistically significant and enough time has passed since funding to allow business plans to have been executed. In this cohort, 22% of the companies have gone on to either raise further funds at a higher valuation or have realized a return for investors via a successful exit. At the other end of the scale 28% of the companies in this cohort have either failed or are showing signs of difficulty.
- The portfolio return of the industry since inception, measured as an IRR, amounts to 2.17%. Assuming that SEIS and EIS tax reliefs are fully utilised, that return increases to 33.79%.
- AltFi Data sees this report as a significant step forward in allowing the sector to transparently demonstrate both the risks and the returns available from equity crowdfunding.
- Establishing a track record for the industry serves two valuable purposes:
- It brings credibility and improved profile to this new asset class.
- It allows investors to asses the historic investor returns delivered by the sector.
- AltFi Data believes that accessing the crowd for finance brings with it an obligation to represent risks accurately by transparently revealing the status of companies that have previously raised money using equity crowdfunding.
- In such a way investors can make a better assessment of the risk that they could lose their investment.
Continue to the full article --> here
Download AltFiData's UK Equity Crowdfunding Report (Nov 2015)
The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more About Us or visit ncfacanada.org.
ATB and SeedUps Canada partner to spread word about equity-based crowd funding
ATB News | November 17, 2015
Calgary — ATB Financial and SeedUps Canada are partnering to help educate small businesses and investors about a new phenomenon: equity crowd funding. Formed in 2014, Calgary-based SeedUps, with its exempt market dealer partner Waverley Corporate Financial Services, is the first online equity crowd funding platform in Canada, allowing early-stage companies an opportunity to raise capital from a broad range of investors. Through equity crowd funding, investors become part owners of the businesses they support.
“We call it being an owner, not a donor,” says Sandi Gilbert, founder & CEO of SeedUps. “Crowd funding has been around for a long time. I grew up on a farm and when we needed to build a new barn, we just got the neighbourhood together and they came and helped us build the barn. At SeedUps, we’re using technology to give companies a broader reach so they don’t have to go door to door to raise capital.”
Check out the Calgary Crowdfunding Bootcamp (Dec. 3) featuring ATB Financial and SeedUps
ATB—the largest Alberta-based financial institution—and SeedUps will work together to build and distribute educational materials for both early-stage companies and investors so they can learn how to participate and benefit from equity crowd funding.
“We’re working hard to be the bank supporting entrepreneurs in Alberta,” says Sean Ballard, ATB’s director of innovation. “We want to help show entrepreneurs and investors how to raise and use capital, where equity crowd funding fits in and how to grow. It’s a great way to serve our customers better.”
Related: New Capital Raising Rules for Canadians
Jump On was the first company to be profiled on SeedUps and the first to generate an investment. Based in Calgary, Jump On books unused charter aircraft and offers low airfare to destinations across North America. So far, Jump On has raised $100,000 in capital through SeedUps investments that will go towards development of new computer software. It was capital the company may not have otherwise been able to raise.
“It was an opportunity to put our name in front of a new group of individuals that was beyond our reach,” says Roger Jewett, Jump On’s founder and CEO. “We were looking for a simple way to give our customers a way to become shareholders and, on the flip side, we wanted our shareholders to become customers. It just seemed to be the perfect fit. It’s been phenomenal.”
Equity crowd funding is also a way for non-accredited investors to participate in high risk/high reward venture capital.
Related: Expansion of crowdfunding in Canada — the doors open wider
“Typically in North America, investing in private companies has been restricted to accredited investors or, in a word, millionaires,” says Gilbert. “Demographically in Canada, that’s a very small amount of people, maybe three or four per cent of the population. But what about the people who make $150,000 a year or who have $400,000 in their investment portfolio? That’s a large group and we’re opening up new investment opportunities for them.”
For further information, please contact:
Barry Strader, Corporate Reporter, ATB Financial
Cell: (780) 886-4398; Office: (780) 495-1343
bstrader@atb.com
The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more About Us or visit ncfacanada.org.
Australia: Minister Kelly O’Dwyer details equity crowdfunding laws
The Sydney Morning Herald by James Eyers | November 16, 2015
Ahead of the federal government's innovation statement next month, Assistant Treasurer and Small Business Minister Kelly O'Dwyer has released details about "crowdsourced equity funding" laws that will allow both start-ups and established small businesses to tap retail investors for equity financing via online platforms.
Under the new laws, participation in crowdsourced equity funding would only be made available to public companies that had $5 million or less in assets and $5 million or less in turnover, and those companies would be able to raise up to $5 million in any year, she said.
Right now in Australia, start-ups and small businesses can't actively access retail investors due to significant upfront and ongoing compliance costs and red tape
Kelly O'Dwyer
Investors will be granted a five-day cooling-off period while intermediaries will need to be licensed by the Australian Securities and Investments Commission.
Related: Australian Government review into crowdfunding: why retail investors could become the new venture capitalists
"Technology-driven innovation is transforming our financial system and has the potential to deliver significant efficiency benefits and improve outcomes across the financial system," Ms O'Dwyer told a breakfast gathering on Monday hosted by the Financial Services Council and BT.
"Right now in Australia, start-ups and small businesses can't actively access retail investors due to significant upfront and ongoing compliance costs and red tape. Changing this will unlock growth and unlock innovation."
The equity crowdfunding laws will be a central plank of the government innovation statement to be released in December. They will bring Australia into line with jurisdictions including Canada, the United States, Britain and New Zealand, which allow retail investors to use digital platforms to provide equity to small business.
Related: Fundrise Goes Global: Australia, UK, Canada Now May Invest
In Australia, Ms O'Dwyer said the $5 million cap on the maximum amount an issuer might raise via crowdfunding in a year was larger than in the US, which capped raising at $1 million in any 12-month period.
"This means the founders of a microbrewery in Tasmania can get their business off the ground with investment from mums and dads in places like Albury and Sydney," Ms O'Dwyer said.
Additional details – including when the laws will come into force and potential limits on how much investors can put through a platform each year – will be announced in the government's innovation statement.
Ms O'Dwyer said the legislation, which the government would introduce to the Parliament this year, would establish a regime for licensing platforms and would require risk warnings to investors.
The government also intended to consult on whether the laws might, ultimately, be extended to debt funding.
View: Open Letter to PM-Designate Trudeau - Crowdfunding: enabling global entrepreneurship, the future of Canada’s innovation economy
Crowdfunding start-ups welcomed the announcement of some of the details of the laws and said the government needed to move swiftly to implement them and study their effectiveness.
"It is good to see Australia is finally moving in the right direction," said Jack Quigley, the managing director of CrowdfundUP, a real estate crowdfunding platform. "We hope this doesn't take another six to 12 months to become a reality and the government moves fast. Consideration should be given to a quick review, within 12 months of the laws coming into force, to see they are working in practice, so we don't get stuck with a system paying lip service to the industry."
Mr Quigley also said the laws should be extended to debt crowd-sourcing, given the financial system inquiry specifically said that crowdfunding should be available for both equity and debt.
Continue to the full article --> here
The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more About Us or visit ncfacanada.org.
