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
Saskatchewan, New Brunswick to join national securities regulator
The Globe and Mail | Steven Chase | July 8, 2014
Two more provinces have agreed to join a voluntary national securities regulator expected to begin operations in the fall of 2015, bringing the total number on board to four and giving the upcoming capital markets watchdog a more pan-Canadian scope.
Sources say Saskatchewan and New Brunswick will sign on to the Cooperative Capital Markets Regulator Wednesday in a ceremony in Ottawa with federal Finance Minister Joe Oliver, embracing a plan backed by Ontario and British Columbia last September.
They join as adjustments are made to governance and operations of the new watchdog to spread out power and decision making more broadly among the provinces and assuage concerns it would be too Toronto-centric.
As they prepare for 2015, participants will try to enlist other provinces, notably Quebec and Alberta, that so far have resisted relinquishing control over capital markets within their jurisdictions.
The addition of both Saskatchewan and New Brunswick is big step forward for the regulator, despite the provinces’ relatively small capital markets presence. The success of the single watchdog rests on momentum – the idea is that once some provinces join, others will feel pressure to follow suit.
The ultimate goal is to create a common nation-wide regulator and end the patchwork of 13 provincial and territorial securities watchdogs.
As it now stands, the four provinces that have joined forces represent nearly 53 per cent of market capitalization of Canadian companies listed on the Toronto Stock Exchange and TSX Venture Exchange. The annual economic output of the financial sector in these jurisdictions represents represents two-thirds of the Canadian total.
One of the persistent provincial concerns about the new regulator is that it would be dominated by Central Canadian concerns. The executive head office is to be located in Toronto along with the chief regulator and a national management team.
Saskatchewan had earlier this year voiced that it was keen to join, so long as local concerns were addressed. While there are only a few publicly traded companies in the province, Saskatchewan Justice Minister Gordon Wyant told The Globe and Mail in May that those concerns include preserving the ability of the province’s small- and medium-sized business to raise capital from sources such as crowdfunding.
Mr. Wyant also wanted to ensure that companies and residents in Saskatchewan enjoy the same easy access to regulators they had when having capital markets regulated from Regina.
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The National Crowdfunding Association of Canada (NCFA Canada) is Canada’s Crowdfunding Advocate. Newly formed, dynamic and inclusive, the NCFA Canada works closely with industry groups, government, academia, other business associations and affiliates to create a strong and vibrant crowdfunding industry and voice across Canada. Membership is comprised of a network of professional individuals, companies and non-profit associations (students are most welcome) interested in crowdfunding markets in Canada and beyond. The National Crowdfunding Association of Canada is a networking and solutions-based organization to provide advocacy, education, support and leadership to Canadian crowdfunding communities. For more information please visit ncfacanada.org.
Invest Crowdfund Quebec’s Response to the AMF Equity Crowdfunding Exemption Proposal
Invest Crowdfund Québec | Diana Yazidjian | July 9, 2014
Our feedback was requested on the following set of 27 questions:
Crowdfunding Exemption
Issuer qualification criteria
1) Should the availability of the Crowdfunding Exemption be restricted to non-reporting issuers?
2) Is the proposed exclusion of real estate issuers that are not reporting issuers appropriate?
3) The Crowdfunding Exemption would require that a majority of the issuer’s directors be resident in Canada. One of the key objectives of our crowdfunding initiative is to facilitate capital raising for Canadian issuers. We also think this requirement would reduce the risk to investors. Would this requirement be appropriate and consistent with these objectives?
Offering parameters
4) The Crowdfunding Exemption would impose a $1.5 million limit on the amount that can be raised under the exemption by the issuer, an affiliate of the issuer, and an issuer engaged in a common enterprise with the issuer or with an affiliate of the issuer, during the period commencing 12 months prior to the issuer’s current offering. Is $1.5 million an appropriate
limit? Should amounts raised by an affiliate of the issuer or an issuer engaged in a common enterprise with the issuer or with an affiliate of the issuer be subject to the limit? Is the 12-month period prior to the issuer’s current offering an appropriate period of time to which the limit should apply?
5) Should an issuer be able to extend the length of time a distribution could remain open if subscriptions have not been received for the minimum offering? If so, should this be tied to a minimum percentage of the target offering being achieved?
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The National Crowdfunding Association of Canada (NCFA Canada) is Canada’s Crowdfunding Advocate. Newly formed, dynamic and inclusive, the NCFA Canada works closely with industry groups, government, academia, other business associations and affiliates to create a strong and vibrant crowdfunding industry and voice across Canada. Membership is comprised of a network of professional individuals, companies and non-profit associations (students are most welcome) interested in crowdfunding markets in Canada and beyond. The National Crowdfunding Association of Canada is a networking and solutions-based organization to provide advocacy, education, support and leadership to Canadian crowdfunding communities. For more information please visit ncfacanada.org.
Crowdfunding Around the World
Forbes | Wil Schroter | July 9, 2014
The United States is abuzz with crowdfunding. From discussions about the potential ramifications of the JOBS Act to the millions raised through rewards crowdfunding, the movement to raise capital online is gaining serious momentum. With all of this nationally-focused noise, it’s easy to forget that crowdfunding is not an American institution. In fact, we were one of the later countries to catch onto crowdfunding.
The concept of crowdfunding has deep international roots, used frequently to finance book prints in Europe in the 17th century. Hopeful book purchasers were able to pre-order printed publications in advance—making it one of the world’s first subscription services as well.
Crowdfunding was also used in music as far back as the 1700s. Even the famous Mozart lacked sufficient funds to bankroll concerts, and used crowdfunding to raise money to hold three events at a Viennese concert hall. Mozart also had the jump on great backer rewards, offering manuscripts of the concertos to his most loyal fans. Not surprisingly, without the power of the Internet it took Mozart over two years to finance the performance.
Modern day crowdfunding has become an incredible force for businesses throughout the world. As more countries make steps to regulate and legalize equity crowdfunding, more investments are being made in early stage businesses across the world.
Some rewards crowdfunding platforms operate across multiple countries, but for the time being, equity crowdfunding platforms are regulated and operated within individual countries. Whether through rewards or equity crowdfunding, it’s incredibly exciting to watch the international startup community grow. Here’s a peek into what’s going on in the rest of the business crowdfunding world.
Canada
Canada allows for rewards-based crowdfunding with minimal regulation but like all of the countries below, has more stringent rules surrounding equity crowdfunding. An early adopter, Canada’s first equity crowdfunding portal, Optimize Capital Markets, launched in 2009 in Ontario.
View: Canadian Crowdfunding Directory
Because of the segmentation of regions within Canada, equity crowdfunding is being approached on a regional level within Canada. In 2013 the Ontario Securities Commission announced that it would allow equity crowdfunding via accredited investors. In the winter of 2013, the province of Saskatchewan also made equity crowdfunding legal.
New Zealand
New Zealand preemptively established legal guidelines surrounding equity crowdfunding in 2013, making it a legal form of raising capital within the country. Several platforms have launched since, allowing New Zealand companies to raise up to $2 million in a 12-month period without the typical offer documents required under securities law.
Italy
Like the U.S. and Canada, Italy has several well-functioning reward-based crowdfunding websites, and has been active in the space since 2011. Just two years later, Italy became the first country in Europe to implement a complete regulation on equity-crowdfunding, creating a national registry for crowdfunding operators. Equity crowdfunding platforms are now operational in Italy.
Sweden
Sweden embraced crowdfunding early on, with the launch of Crowdculture in 2010, a platform for funding cultural projects. Equity crowdfunding became possible in Sweden in late 2012 and is currently being practice by platforms like FundedByMe.
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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada crowdfunding hub providing education, advocacy and networking opportunities in the rapidly evolving crowdfunding industry. NCFA Canada is a community-based, membership-driven entity that was formed at the grass roots level to fill a national need in the market place. Join our growing network of industry stakeholders, fundraisers and investors. Increase your organization’s profile and gain access to a dynamic group of industry front runners. Learn more About Us or contact us at casano@ncfacanada.org.
Crowdfunding Platform Seedrs Begins Offering ‘Convertible’ Equity Option
TechCrunch | Steve O'Hear | July 7, 2014
Proof there’s still room for innovation in the equity crowdfunding space yet, if Seedrs‘ claims of a first hold true. The “pan-European” equity crowdfunding platform is adding ‘convertible’ equity as an option for startups wanting to raise funding via the site, with the UK’s Future Ad Labs being the first to use the new investment mechanism.
Convertibles, commonly used in Silicon Valley and increasingly in Europe, offer the advantage of simplicity and speed, since the company’s valuation is deferred to a future date, typically when a larger VC round takes place and determined by the VCs leading the subsequent round.
Meanwhile, investors in a convertible equity (note, I’m referring to equity not debt) are offered a discount in relation to that future valuation. In the case of Future Ad Labs, it’s offering a 15 per cent discount to ‘armchair’ investors via Seedrs.
The London-based startup, which offers a revenue-generating and more human-friendly alternative to the CAPTCHA, is aiming to raise a further £400,000 through a Seedrs convertible round, adding to the $1 million in funding previously raised from a list of backers that includes Passion Capital, Balderton Capital, Ballpark Ventures, and accelerator Ignite100.
Part of that previous round also included £60,000 from 70 investors via Seedrs. In other words, Future Ad Labs has chosen to return to equity-crowdunding to raise what it sees as a bridge round before it goes out and raises a more substantial series A round; hence the choice to do it via a convertible.
View:
Asked about the thinking behind choosing to do a convertible note through equity crowdfunding and not simply by going back to current investors, Future Ad Labs co-founder Jacques Kotze tells me the startup had a “good experience” with Seedrs before, despite being one of the first to use the platform (when I understand it had a few teething problems) and that it was “natural to return as they pioneer the use of convertibles in crowd finance.”
Kotze also says many of Future Ad Labs’ current VCs and angels will be participating in this round. “We’re not turning away from them, but we’re combining their value with the value of the crowds,” he adds. “We think it’s a wonderful opportunity for ordinary investors to invest alongside top VCs, such as Passion Capital and Ballpark Ventures, on exactly the same terms.”
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New trading platforms connect junior players with high net worth Canadians
Want to buy shares in a private company like Coral Hill Energy Ltd.? How about Star Valley Oil & Gas Ltd., which was founded by energy sector veteran Paul Colborne? Want to get those shares from management before the companies go public, and perhaps before their share prices appreciate?
Sometime in late fall or early winter of this year, TMX Group, which owns and operates the Toronto Stock Exchange, will launch TSX Private Markets. If it goes ahead, TSX-PM as we’ll call it, would allow investors to do just that. After it’s launched, TSX-PM will become the second private market platform launched in Canada in 2014 and its creators say that it will help farm new investment for Canadian businesses by increasing the liquidity of private capital.
Peter Conroy, the president of Shorcan Brokers Ltd., has been crisscrossing Canada promoting TSX-PM to brokers, private equity firms, provincial securities commissions and junior oil and gas companies. In fact, Conroy says, it was Shorcan’s oil and gas division that initially came up with the idea. He credits the Calgary-based vice-president of Shorcan Energy Brokers, Tarun Ajwani, with suggesting the TMX Group (which owns Shorcan) get into the so-called grey market. Ajwani suggested TMX create a platform where it could bring many people together to buy and sell private securities and make valuations more transparent. After all, Nasdaq entered into a joint venture with SharesPost in March 2013 to create Nasdaq Private Market and take the trading of private equity semi-public. Now Conroy and Ajwani believe the same type of platform in Canada could be a perfect fit for Canadian energy players – and particularly for oil and gas juniors.
View: TMX Group CEO Kloet looking at Crowdfunding technology
If you’re among the approximately two per cent of Canadians wealthy enough to qualify as an accredited investor, which you must be to play on TMX-PM, the promise of buying into private, high-potential oil and gas juniors on an organized exchange is just around the corner.
TMX Group, though, isn’t the only company wading into the private equity market. A new and potent rival, Aequitas Innovations Inc., is not only building an exchange for publicly traded shares to directly take on the TSX, it announced in the summer of 2013 plans to also create the equivalent of a dating site to hook up those with equity to sell in private companies and those looking to buy it.
Aequitas, privately held by a consortium that includes RBC Dominion Securities Inc., OMERS Capital Markets, Barclays Corp. and others, has yet to name its private equity platform. For competitive reasons, details of the “customized solution tailored to the needs of private companies who require funding and liquidity” will be released towards year-end, the company told Alberta Oil in an email.
Related: Aequitas Neo Exchange Applies for Formal Approval
Aequitas and TMX Group promise that, aside from improving liquidity, their new platforms will be centralized channels for raising new private capital for small- and medium-sized Canadian enterprises. If they’re right, they could provide a new way for Alberta’s struggling junior oil and gas sector to raise capital in an era when traditional sources, the public markets and banks, aren’t coughing much up.
TMX and Aequitas are betting on the exempt market, where an increasing number of companies are turning to private equity. It’s a market with fewer regulations and lower costs for issuing private versus public stocks. You don’t, for instance, have to create, print and distribute a highly detailed and costly prospectus as you must do when issuing stock on the TSX or TSX-V. You can use an “offering memorandum” exemption, which requires less detailed information detail.
“We have our senior market and we have our venture market and now we can really delve into assisting smaller companies with liquidity and capital formation.”
Private equity is normally issued and sold on the exempt market strictly to accredited investors through exempt market dealers (EMDs). In Canada accredited investors are defined as an individual or couple with financial assets worth more than $1 million before taxes but net of liabilities. It can also be an individual whose net income before taxes in both of the past two years exceeds $200,000 and who expects to maintain that income. For couples, combined incomes must exceed $300,000 per year. As 98 per cent of Canadians are excluded from this category, many traders say it’s been difficult to match private capital with private companies without a centralized, organized platform where parties can transparently size one another up.
“From a private markets perspective,” says Aequitas chief executive Jos Schmitt, “it is a well-known fact that venture capital in Canada is not working as it should today. Many small- and mid-sized Canadian companies are unable to access the capital they need from private sources, leading them to rush into foreign ownership, strategic buyers or listing too early on public markets.” Schmitt says Aequitas’s private market solution will “unleash a new wave of funding and will help transform today’s small- and mid-sized companies into the large, market leaders of tomorrow.”
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500 Startups is Using Public Fundraising for New $100M Fund
WSJ | By Lora Kolodny | June 26, 2014
Active early-stage investor 500 Startups is embracing new federal rules for public fundraising, the highest-profile firm yet to make use of the new rules.
500 Startups, founded in 2010, is using new Securities and Exchange Commission rules that allow firms to engage in “general solicitation,” or public fundraising activities. Fund partners taking advantage of the rules are permitted to speak at public events, tweet about and advertise the fact that their firms are raising a fund.
500 Startups runs a prolific early-stage venture fund; a large, global accelerator program for tech startups; and a series of tech conferences and events like “Geeks on a Plane.”
The firm plans to raise $100 million for its new, third fund, according to the contents of fundraising documents viewed by VentureWire.
Its founder, Dave McClure, said his fund has joined with New York-based SeedInvest, an online investment platform, to facilitate public fundraising.
SeedInvest created an “equity crowdfunding” platform, and other tools that facilitate online seed and venture investing or fundraising by both companies and funds.
View: AngelList the Patron Saint of Equity Crowdfunding
The firm will use white-label SeedInvest technology to run a website, 500.co/invest, where interested accredited investors can review the firm’s public statements, make their interest known, get their accredited status verified, and put their money into 500 Startups’ newest fund without a lot of paperwork and snail mail.
500 Startups’ general-solicitation effort also will include capital raising for three smaller funds: one that will put follow-on capital into startups that it backed in its earlier funds, and two that will work with investors and startups in Latin America and Southeast Asia, according to the fundraising documents.
At least three other venture firms–ff Venture Capital, Scout Ventures and NIN Ventures–have engaged in public fundraising under a provision of 2012’s JOBS Act, but most institutional firms haven’t embraced the possibility.
Mr. McClure said traditional investors, or firms and funds that have been around for at least five years, already have processes they are comfortable with and often raise capital “exclusively from larger institutional [partners] who they need to go talk to privately anyway.”
A younger firm like 500 Startups, he said, may need to be more vocal about its fundraising to attract new investors. And in 500 Startups’ case, the firm has a strong online presence that it plans to take advantage of to spread the word about its new funds.
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Real estate investors locked out of crowdfunding craze over fear home flippers will move in
Financial Post | Allison Lampert | June 24, 2014
Buying a stake in a rental building shouldn’t be more worrisome for a securities regulator than say, investing in a tech start-up, says Craig Asano.
But the executive director of the National Crowdfunding Association of Canada says provincial securities commissions are currently planning to exclude the “tried and true asset class” of real estate from using equity crowdfunding to raise money online and through other electronic means.
“It’s an area of growth,” he said. “We believe at the association that it shouldn’t be excluded.”
Regulators are considering making it easier for small and medium-sized enterprises (SME’s) to raise capital from ordinary investors online. Those regulators say they “have concerns” with the prospect of real estate companies – apart from reporting issuers such as a REIT — using Internet crowdfunding portals to sell real estate securities.
The Ontario Securities Commission, for one, has questioned whether simply acquiring real estate assets would fall within equity crowdfunding’s objective of raising capital for small businesses.
Related: The draw of real estate equity crowdfunding
Alixe Cormick, founder of Venture Law Corp, a boutique securities law firm in Vancouver, suspects regulators fear giving non-reporting real estate issuers easy access to equity crowdfunding might trigger a wave of interest from developers who simply want to flip homes. What’s more, observers say regulators fear the potential for abuse by non-reporting real estate companies, following several high-profile cases of alleged fraud under existing securities rules.
“I could go on and on about the abuses,” added Ms. Cormick, an attorney.
Aimed at small, innovative businesses, a proposed crowdfunding exemption would allow companies to raise a limited amount of capital without providing a prospectus or regularly audited financial statements. It will also open the doors to companies soliciting ordinary investors as opposed to high net worth individuals.
In the U.S., real estate has emerged as one of the most popular sectors for crowdfunding, raising more than $135-million in debt and equity, according to a report published this month by the Wall Street Journal.
View: Open Avenue wants to bring crowdfunding to real estate
These crowdfunding Internet portals, many of which opened following the U.S. Jumpstart Our Business Starts Act (JOBS) of 2012, target so-called accredited investors, who have an individual income of $200,000, or own financial assets worth more than $1-million. In Canada, these high net worth individuals are said to make up 4% of the Canadian population based on income or assets. The new crowdfunding rules would give these companies a far broader reach.
U.S. regulators, like those in several Canadian provinces including Quebec, Ontario and Manitoba, are now mulling new rules that would allow ordinary investors to buy small stakes in these companies.
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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada crowdfunding hub providing education, advocacy and networking opportunities in the rapidly evolving crowdfunding industry. NCFA Canada is a community-based, membership-driven entity that was formed at the grass roots level to fill a national need in the market place. Join our growing network of industry stakeholders, fundraisers and investors. Increase your organization’s profile and gain access to a dynamic group of industry front runners. Learn more About Us or contact us at casano@ncfacanada.org.
