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
6 Myths Of Equity Crowdfunding
Forbes | Ryan Caldbeck | Mar 19, 2015
Online equity fundraising platforms — also known as equity crowdfunding platforms — are becoming increasingly popular, and growing in size. As a result, they are attracting more and more attention from anxious investment bankers, which in turn has led to rhetoric suggesting wise investors stay clear. As the founder and CEO of CircleUp , a platform for equity investing in early-stage, high-growth-potential consumer companies, I routinely hear variations of the following arguments:
- “You’ll get too many investors in your cap table.”
- “People will see all your company’s proprietary information.”
- “People will see you are raising.”
- “It’s bad for your brand to be seeking funding online.”
- “Only companies that can’t raise offline raise online.”
- “I already have connections to investors, so you don’t need to use an online platform!” (Said every small investment bank ever.)
Let’s unpack each.
1) “You’ll get too many investors in your cap table.”
I agree that having 75+ investors is not good for a young company. What an investment banker won’t tell you is this: top equity funding platforms put the entrepreneur in control. Entrepreneurs on CircleUp, for example, decide both the minimum dollar amount per investor and the total number of investors in each round.
I’ve seen our entrepreneurs close online rounds with just one investor; while others have wanted more investors to gain a larger network of passionate brand advocates to help grow their brand.
View: Dispelling myths from 'popular delusions of crowdfunding'
2) “People will see your company’s proprietary information.”
Most online platforms have private deal rooms which allow entrepreneurs to determine and approve which investors get access to sensitive information. And before they do so, entrepreneurs are given tools to assess a prospective investor’s background, as well as the option to open a conversation with them before providing access to business financials and other sensitive information.
Contrast the control you have in this model with a small investment bank creating a pitch book with all the business’s data and financial models that is then sent out to a hundred investment firms – with no assurances of raising capital.
That decision—to flood the market with your Private Placement Memorandum (“PPM”) – is a common one with small, and candidly desperate, investment banks. They care much less about your long term health, and much more about their own short-term revenue. Consequently, your company’s PPM lands in the inboxes of hundreds, if not thousands, of investors. Most of whom are irrelevant; all of whom now have access to your company’s sensitive financial and operational information. I’ve seen this one too many times. (Read about just one example here.)
There is no scenario in which there is zero risk of releasing sensitive business information. And that applies to any form of investment—serious investors demand to see all pertinent information. But to suggest this risk is greater online than with conventional financing is wrong.
3) “People will see you are raising.”
What do Airbnb, Snapchat and Photobucket have in common? They’ve been in the news recently because they are raising capital. Similarly, Uber disclosed intentions last fall (and several times since) to raise more than $1 billion. These are public discussions — and I candidly don’t understand why that hurts the company.
It is common to see news reports about tech companies seeking capital. Strong, fast-growing companies with promising futures aren’t afraid to let the world know they are raising capital. On the contrary: it’s often seen as a sign of strength.
That said, leading online funding platforms allow businesses to guard information about a capital raise. (As mentioned above, the entrepreneur maintains complete control, deciding who can view confidential information and when.)
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 950+ 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.
#CCS2015 Wrap-up (Mar 3, 2015): 2015 Canadian Crowdfunding Summit
NCFA Canada | March 12, 2015
On March 3, 2015, the National Crowdfunding Association of Canada hosted the 1st annual Canadian Crowdfunding Summit at MaRS Discovery District in Toronto, Canada. The event sold out with over 300 attendees, 50+ speakers, 12 live pitching & showcasing companies from Canada, the US, and abroad.
View the highlights video or download the video + content pack.
Looking to get involved next year? Check out the CCS2015 Post Event Report.
Equity Crowdfunding Dominates Discussion at Canadian Crowdfunding Summit
Techvibes | by Donal Power | March 5, 2015
The fast-evolving field of equity crowdfunding was the hot topic at the inaugural Canadian Crowdfunding Summit in Toronto earlier this week. A capacity crowd of nearly 350 filled the MaRS auditorium for a full day of crowdfunding-related speakers, seminars and product pitches hosted by the National Crowdfunding Association of Canada.
Dominating the summit was discussion about the potential benefits and pitfalls of the emerging field of equity crowdfunding, which lets individual investors fund startup companies and small businesses online in return for equity.
Of the $5 billion global crowdfunding marketplace in 2013, Funding Portal CEO Teri Kirk estimated that equity crowdfunding comprised only 4% of the total, compared to 96% in non-equity crowdfunding that consist of product pre-sales, donations and rewards. However, with the global crowdfunding marketplace projected to grow to $96 billion by 2025, she noted that a 4% share still represents a huge opportunity, without even factoring in the accelerated growth anticipated for equity crowdfunding worldwide.
View the full article --> here
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Checkout some images of the SELL OUT CCS2015
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 950+ 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.
Final Canadian crowdfunding rules could be published by summer
Financial Post | Barbara Shecter | Feb 19, 2015
Canadian regulators hope to have a crowdfunding regime in place by the summer.
In a notice Thursday, the Ontario Securities Commission said regulators in several jurisdictions are in the midst of reviewing comment letters received in response to crowdfunding rules proposed last year.
The next step is either final rules or a second comment period, if required.
The crowdfunding regime proposed last year would allow startups and small-to-medium-sized businesses to raise capital from a potentially large number of investors though an online portal registered with securities regulatory authorities. Businesses could raise up to $1.5-million during a 12-month period.
Investors would be limited to $2,500 for a single investment, and $10,000 in total for each calendar year.
Regulators in Manitoba, New Brunswick, Nova Scotia, Quebec, and Saskatchewan also sought comment on the proposed crowdfunding regime.
OSC to Speak at 2015 Canadian Crowdfunding Summit on March 3 at MaRS Discover, Toronto
The Ontario Securities Commission said Thursday it will introduce a previously proposed new exemption governing investments in the exempt market to bring the province in line with other jurisdictions. The “friends and family” exemption will allow businesses to raise capital from investors who are either principals of the business or “within the personal networks” of the principals of the business.
The exemption, which is intended to help early-stage businesses raise money, is expected to come into effect on May 5.
Neil Gross, executive director of the Foundation for the Advancement of Investor Rights (FAIR Canada), said the new exemption will be “difficult to police.”
The investor advocacy group has long opposed the friends and family exemption in other provinces where Mr. Gross said it “is widely abused.” Despite safeguards adopted by the OSC, such as prohibiting advertising and finders’ fees or commissions, he said he doesn’t think it will be sufficient to protect investors, particularly given the “practical difficulties” of ensuring compliance.
Continue to the full article --> here
SEE YOU AT THE SUMMIT! 2015 Canadian Crowdfunding Summit on March 3 at MaRS Discover!
- Looking for funding? Need help navigating the landscape? Seeking regulatory updates?
- Learn from successful crowdfunders who have raised millions of dollars for their new ventures.
- Looking for new early stage investment opportunities?
- Connect with this dynamic and growing industry today - see you at the Summit (#CCS2015)!
Buy now to receive 10% discount on #CCS2015 Summit Tickets!
OSC Adopts Family, Friends and Business Associates Prospectus Exemption
OSC News Release | February 19, 2015
TORONTO – The Ontario Securities Commission (OSC) today published a family, friends and business associates prospectus exemption which is expected to provide a cost-effective way for issuers (other than investment funds) to raise capital from their networks of family, close personal friends and close business associates. Subject to Ministerial approval, the exemption comes into effect on May 5, 2015.
The exemption is largely harmonized with an exemption that is currently available in other Canadian jurisdictions. It allows for the sale of securities by a selling security holder or an issuer to principals of the issuer as well as certain family members, close personal friends and close business associates. The exemption is based on investors having a sufficiently close relationship with a principal of the issuer to assess the capabilities and trustworthiness of the principals and access information about their investment. As a condition to the exemption, a signed risk acknowledgement form must be obtained, setting out the key risks related to the investment and confirming how the investor qualifies to make the investment.
“Early stage issuers will benefit from this exemption as it will provide them with greater access to capital at a critical stage,” said Howard Wetston, OSC Chair and Chief Executive Officer. “Investors will also benefit through greater access to opportunities at the ground level, and everyone benefits from greater harmonization across Canada.”
The exemption is one of four new exemptions to facilitate capital raising by businesses at different stages of development that were published for comment in March 2014 as part of the OSC’s exempt market reform initiative. The comment period for the proposed exemptions closed on June 18, 2014 and the OSC received approximately 815 comment letters. The existing security holder prospectus exemption came into effect in Ontario on February 11, 2015.
An update on the remaining exemptions – a crowdfunding exemption and an offering memorandum exemption – is being issued in connection with this publication.
The OSC is the regulatory body responsible for overseeing Ontario’s capital markets. The OSC administers and enforces Ontario’s securities and commodity futures laws. Its mandate is to provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in capital markets.
The objective of the exempt market reform initiative is to facilitate capital raising for start-ups and small and medium-sized enterprises and to modernize Ontario’s exempt market regulatory regime, while providing adequate protections to investors.
View the news release --> here
- SEE YOU AT THE SUMMIT! 2015 Canadian Crowdfunding Summit on March 3 at MaRS Discover!
- Looking for funding? Need help navigating the landscape? Seeking regulatory updates?
- Learn from successful crowdfunders who have raised millions of dollars for their new ventures.
- Looking for new early stage investment opportunities?
- Connect with this dynamic and growing industry today - see you at the Summit (#CCS2015)!
Buy now to receive 10% discount on #CCS2015 Summit Tickets!
Equity Crowdfunding Québec to promote new ways of investment in province’s small businesses
ITbusiness.ca by Candice So | February 17, 2015
A group of Quebec-based crowdfunding supporters have banded together to create a new non-profit organization, dedicated to promoting equity-based crowdfunding from within the province.
On Tuesday, the group launched Equity Crowdfunding Québec (ECQ), a new organization that will represent SMBs, startups, entrepreneurs, and other stakeholders in the province as regulators draft equity-based crowdfunding legislation. Its core group is made up of legal professionals, financial professionals, and business-owners.
Up until this point, ECQ had been largely an informal group, with little more than a website containing news and resources on crowdfunding. But as a formal, not-for-profit organization, ECQ hopes to be able to have a say in the process of drafting equity-based crowdfunding legislation, said Gil Michel-Garcia, one of the leaders of the new association.
“In Canada, [regulators are] working on legislation across all the Canadian provinces to have a standardized set of rules that is going to govern how you allow crowdfunding to be done over the Internet to a mom and pop investor,” he said, adding that it’s important for Quebec to have a voice in any legislation that could affect Quebec-based businesses.
“That’s why you need an organization that’s able to, from a local Quebec perspective, to represent views.”
Related: Two Equity Crowdfunding Specific Exemptions Taking Hold in Canada
For example, ECQ would encourage regulators to remember that Quebec’s companies would do most of their business in French, and that they would also be using Canadian dollars. That can be can be an issue for cross-border investments, especially if an anglophone investor from a different province wants to invest, or a U.S.-based individual wants to invest, he said.
Tackling all of these complicated issues may be a thorny task, but Michel-Garcia has seen first-hand how crowdfunding can help businesses grow.
Aside from leading ECQ, he’s also the CEO of Wafu Inc., a Montreal-based company that creates Japanese mayonnaise for sandwiches and burgers. In 2013, Wafu closed the first accredited investor equity crowdfunding round by a Canadian company within the U.S. through CircleUp, a U.S.-based equity crowdfunding platform aiming to connect investors with companies creating consumer products.
Related: WAFU Inc. Launches First Ever Simultaneous Cross-Border Equity Crowdfunding offering
Thanks to his own experience in crowdfunding, Michel-Garcia said he knows how hard it can be for small to mid-sized businesses (SMBs) to raise capital without help. His own company was originally made up of just two people – himself and Mari Toyoda, a former restauranteur who helped create Wafu’s Japanese vinaigrettes.
“What allowed us to grow was my ability to be able to access capital internationally, locally, and obviously I’m familiar with how to do this,” he said, adding that other SMBs typically rely on small business loans, or on friends and family, to help them get started. But nowadays, given SMBs have the power to market themselves through their websites and social media channels, it only makes sense to allow them to turn their most supportive customers into investors.
“I truly believe that equity crowdfunding will be transformational for small businesses in Canada. It will absolutely allow the people that have good ideas, good businesses, good products, good services, to be able to access the capital they need and grow,” Michel-Garcia said.
For Craig Asano, executive director of the National Crowdfunding Association of Canada (NCFA), the ECQ is a step forward for equity-based crowdfunding in Quebec.
“We think it’s great they have their own community, and obviously constituents in the French language to service,” he said. “We think they can add tremendous value representing the Quebec needs and perspectives … It’s early days, and we’re here to assist them and work collaboratively to build out, in a positive manner, all forms of crowdfunding.”
So far, only the province of Saskatchewan has an exemption in place for equity-based crowdfunding. The Ontario Securities Commission has said it intends to publish a crowdfunding-specific prospectus exemption, with its last introduction of potential regulations released in March 2014, while British Columbia, Manitoba, New Brunswick, and Nova Scotia are also looking at creating their own rules for raising equity for businesses.
Michel-Garcia will be one of the speakers at the NCFA’s Canadian Crowdfunding Summit in Toronto, set to be held March 3.
View the original article on itbusiness.ca --> here
Join us at the upcoming 2015 Canadian Crowdfunding Summit on March 3 at MaRS Discovery District!
- Looking for funding? Need help navigating the landscape? Seeking regulatory updates?
- Learn from successful crowdfunders who have raised millions of dollars for their new ventures.
- Looking for new early stage investment opportunities?
- Connect with this dynamic and growing industry today - see you at the Summit (#CCS2015)!
InvestX Brings Crowdfunding to Private Equity Deals
The Wall Street Journal by Amy Or | February 13, 2015
The rush to tap individual investors’ money for venture and private equity deals has taken on a new twist.
InvestX Capital Ltd., founded last year with offices in Dallas and Vancouver, has established a crowdfunding platform for so-called accredited investors to back venture and growth equity deals, similar to what Kickstarter does for individual projects.
The operating model—made possible by the April 2012 passage of the Jumpstart Our Business Startups, or JOBS Act, which relaxed rules governing how companies can raise capital—is a 180 degree shift from the traditional fundraising practice that private equity firms employ, where a select group of investors commit to a blind pool of capital for investing.
Related: Private Equity Crowdfunding Marketplace for Retail Investors InvestX Announces Beta Launch
InvestX partners up with financial sponsors who slice out a part of their deals for small investors, according to founder and Chief Executive Marcus New.
Many of the biggest names in private equity have been pursuing retail investors’ money in a bid to diversify their investor bases.
Blackstone Group said late last month that it had launched a first-generation retail vehicle, Blackstone Total Alternative Solutions Fund. That follows a move by Carlyle Group, which established a platform to bring individual, accredited investors into its buyout funds.
The minimum investment to get into Carlyle’s platform is $50,000. Blackstone’s is $250,000.
InvestX, on the other hand, allows accredited investors to participate with a minimum of just $2,500. For an individual to qualify as an accredited investor, they must have annual income of more than $200,000 or a net worth of more than $1 million, excluding a primary residence.
View: The Future Of Alternative Investments And Crowdfunding
On the InvestX platform, investors take part on a deal-by-deal basis, which means they can choose deals they like and skip those they don’t. That differs from a traditional co-mingled fund structure in which investors commit to every deal a private equity firm makes.
Mr. New said InvestX investors are getting the same deal terms as other co-investors in each deal. In exchange, InvestX investors pay the platform a 2% management fee and a 20% cut of profit, just as they would in a private equity fund.
InvestX is bringing investors two new deals this week: touch screen display technology developer and manufacturer Baanto International Ltd., in which InvestX has a $500,000 allocation out of a $1.5 million add-on to a Series C funding round; and $2 million out of a $150 million fundraise for SineWave Venture Partners, a newly established venture fund that seeks to back early stage technology companies.
Related: Why Financial Firms are Joining the Crowd
The deals follow InvestX’s debut transaction: participation in a $6.5 million Series C round of funding for Cleveland HeartLabInc., a clinical reference laboratory involved in cardiovascular risk assessment.
In that deal—slated to close Feb. 14—InvestX teamed up with lead investor Mutual Capital Partners, a Westlake, Ohio-based venture capital firm. The Cleveland Clinicand life sciences venture capital firms HealthCare Venturesand Excel Venture Management also participated in the round.
InvestX has so far raised $600,000 for the Cleveland HeartLabdeal, said Mr. New.
Related: Equity Crowdfunding Frequently Asked Questions (FAQs)
Mr. New expects to bring altogether 20 to 30 deals to the InvestX platform this year, ranging from Series A to growth equity, and from deals involving an individual company to fund of funds. He said the wide variety, particularly in the initial phase of the platform, is aimed at taking out the risks of just having deals on, say, the venture end of the investment spectrum, and to find out retail investors’ risk appetite.
The firm is still determining what it will do if fundraising on the platform falls short of the target.
“We expect some deals won’t be funded properly, we understand that. It is a process to learn what investors want in deals,” he said.
Continue to the full article on WSJ.com --> here
Hear Marcus New, CEO of InvestX Speak at the 2015 Canadian Crowdfunding Summit (#CCS2015)
