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
Canada’s Equity Crowdfunding Market Takes Tips From The UK
By Robert DeFilippi of Fundrazr via
Just across the pond in the UK, another start up has used the power of equity crowdfunding to raise the much needed capital to expand their offerings. Humble Grape has surpassed their initial goal of £250,000 ($450,000 CAD) and is still collecting capital in excess of £330,000 ($615,000 CAD). That is a substantial amount of money for any new business to acquire, and just what Humble Grape needed to help with their expansion plans.
Humble Grape’s model for raising funds is a perfect case study for what other small companies should aspire to: establish some clientele, have revenue flowing, connect with suppliers, and understand why money is needed to expand. More importantly, founder James Dawson and director Cameron Gordon were able to convey their passion and experience through a short 2 minute video pitching their business to interested crowd investors. James conveys the passion he has for his company which drove him to deliver the initial shipments of wine on his motorcycle, to now entertaining impressive clients such as Deutsche Bank. A track record of success and a passion for the business, greatly differentiated Humble Grape from other crowdfunding campaigns and allowed them to easily make their funding goals.
Related:
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OSC request for comment on proposed Crowdfunding prospectus exemption and portal requirements (expires Jun 18, 2014)
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CSA (participating jurisdictions) request for comments on equity crowdfunding draft regulation 45-108 (expires Jun 18, 2014)
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BCSC request for comments on Startup Crowdfunding Exemption (expires Jun 18, 2014)
Another defining feature of this campaign was their use of equity crowdfunding and not the traditional rewards or donation model. Instead of giving away a few bottles of wine in return for a donation to their business, they instead gained shareholders who believe in their business model and invested in an idea they want to see grow. Equity crowdfunding is an idea whose time has come, where people from anywhere can invest and own new companies without going through the traditional brokers and dealers.
Humble Grape was able to choose between a rewards campaign and a equity campaign, because the laws in the UK and the rest of Europe are not as restrictive as in North America. Recent changes in the securities landscape of Canada will allow certain provinces to sell equity online through a portal without the usual financial reporting fees and regulation. It’s currently available but not yet used in Saskatchewan, and by autumn 2014 Canada’s three biggest provinces – B.C., Ontario, and Quebec – along with New Brunswick and Nova Scotia will have similar rules enacted. Its exciting, new, and opens up the market to 98% of Canadians who could not have participated previously. The restrictive market for investing is on the way out, and is being replaced with a flatter, more transparent, crowd based platform.
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AngelList – The Patron Saint of Equity Crowdfunding
Crowfund Insider | By | June 4, 2014
AngelList, the crowdfunding trailblazer, who was “equity crowdfunding” before people even knew what that meant, initially started as simply a matchmaker for angel investors and startups. As a legal and securities nerd I understand the difference between the Magna Carta and the AngeList SEC No Action Letter – but they were close.
Seriously, AngelList began as a “giveback” to the startup community by Naval Ravikant and Babak Nivi and has arguably become the top equity crowdfunding platform in the world.
In 2010 they officially started the site and brought on Kevin Laws as COO. Initially AngelList’s value-add was a set of standardized legal documents; now, it provides employment resources, syndications and financing opportunities for startups and small companies.
Because AngelList was technically providing assistance to issuers by using form documents and giving a helping hand, the SEC issued an inquiry letter from SEC enforcement questioning their non-broker-dealer status. Once it was explained that AngelList was not receiving any compensation for its activities, the SEC backed away.
Related: AngelList feature gives investors ready made startup portfolio
It was quickly clear to the young platform that AngelList activities may cross certain legal lines and new regulation or no action relief (letters provided by the SEC which ensure that they will not prosecute certain behaviors) was necessary. In 2012 new regulation came in the form of Section 201(c) of the JOBS Act. Not enough has been written regarding this JOBS Act provision which allows an online platform to avoid registration and compliance as a broker or dealer pursuant to the federal securities laws as long as it doesn’t take transaction based compensation, or custody of customer funds, or is otherwise disqualified from participating in the securities industry, but there it is. In addition, in 2013, AngelList received the much heralded no-action letter that allowed for their syndication model to exist (and thrive).
View: AngelList commits to crowdfunding
The syndication model allows for certain seasoned investors to amalgamate other investors they may know, or who may know of them, to co-invest in businesses they deem worthy. Other investors in their network may choose to tag along in the lead investor’s decision based on such investor’s past track record, experience or otherwise. The process basically provides for another level of vetting.
Looking at all investment models – AngelList has some impressive stats:
- 2,500 companies with successful raises
- $250 million in funds raised “via” AngelList (this number is 100% verifiable through the platform and may be a little light)
- 30,000 accredited investors in their network
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N.S. proposing rules to govern start-up crowdfunding
CBCNews Nova Scotia | June 5, 2014
The Nova Scotia Securities Commission has outlined new rules that would govern how start up and small businesses raise capital using crowdfunding.
The province is one of several in Canada proposing regulations for equity crowdfunding.
Crowdfunding involves funding a project or venture by raising many small amounts of money from a large number of people, typically through the internet.
It has emerged in recent years as a successful way for small and start-up businesses to raise money.
Decision based on demand
Abel Lazarus, a securities analyst with the Nova Scotia Securities Commission, said their decision to bring in regulations is based on demand.
"There's been quite a bit of feedback from folks who are looking to raise capital. They're having a hard time raising capital and some of the costs to raise that capital are extremely prohibitive," he said.
View: New crowdfunding research paper shows evidence of demand driven securities regulation
Request for comments: CSA equity crowdfunding draft regulation 45-108 (until June 18, 2014)
"Some of those costs involve lawyers, investment bankers, accountants, so they're not very large entities looking to advance their companies."
The NSSC stresses the new rules would not impact raising donations through crowdfunding.
Start-up businesses would be allowed to raise a maximum of $300,000 per year with the offering solicited through an on-line portal.
They must have a Canadian office and investors would be limited to a $1,500 maximum.
A final version of the new rules is expected by the end of the year.
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The Draw of Real Estate Crowdfunding
FoxBusiness | Kate Rogers | June 3, 2014
Andy Feinstein says he’s a property owner and manager, but has outsourced all the headaches that typically accompany being a landlord.
The 45-year-old consultant, based in Washington, D.C., has a stake in an apartment complexes in Los Angeles and Mesquite, Texas, as well as a mobile home fund set up across the northeast. But he doesn’t have to worry about collecting rent checks or dealing with troublesome tenants.
He’s invested more than $50,000 through Realty Mogul, a crowd funding platform for real estate investing, and says it’s been well worth his while. He had formerly bought property in Blacksburg, Va., a college town, and says this alternative investment platform has given him less worries.
“Just like with any real estate investment, you give away a lot of the responsibility,” Feinstein says. “But instead of traditional investments, you get almost all of the same benefits--with less control--but also less headaches.”
Feinstein is one of 10,000 accredited investors and a part of the $20 million in transactions Realty Mogul has done in the past year and a half. Investments are done once a property or loan’s investment target goals are met, and in the case they are not, 100% of the cash is returned to the investor. Feinstein says he gets between 8% and 15% return on his investments coming in annually.
Realty Mogul CEO Jilliene Helman, 27, started the company in September 2012, five months after the Jumpstart Our Business Startups (JOBS) Act was passed. The JOBS Act loosened restrictions on crowdfunding allowing individuals to directly invest in companies.
View: Open Avenue Wants to Bring Crowdfunding to Real Estate in Canada
“I saw this as an opportunity. It was the first the securities laws had changed in 80 years,” she says. “I saw this insatiable desire from high-net-worth investors, and the best vehicle I know of to generate cash flow and income is real estate.”
And Helman isn’t entering the real estate world on a hunch—she comes from a family of developers and investors. Her father on the industrial and commercial real estate side, and her mother on the luxury residential side of the business.
The company can be compared to a private real estate trust, but for lower income levels as investments beginning at $5,000, she explains. Competitors include Prosper and Fundrise.
That was the draw for Brad Hopkins, 54, from Dallas, who liked the low barrier to entry and diversity in investment options. The manager at Supreme Funding Group, invests in real estate through his family business, and has done $70,000 in deals with Realty Mogul—one retail shopping center in San Antonio and another single-family loan fund. He says there will be high growth returns on the shopping center of between 8% and 9.5% this year.
Related: Crowdfunding real estate catching on: The concept allows small investors to invest in their neighbourhoods
“There are always downside risks in [real estate] investments--in this case, you have to manage the managers of the property. You want to go in and look at financial results every month, make sure it’s heading in the right direction,” Hopkins says. “Investing in real estate for where we are in our lifestyle, it’s more stable and gives an above-average return than the stock market. We will absolutely use this to fund our retirement.”
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US State Equity Crowdfunding Policies Hold Promise
Forbes | Dane Stangler | May 28, 2014
More than two years after passage of the Jumpstart Our Business Startups (JOBS) Act, the U.S. Securities and Exchange Commission (SEC) is still writing the regulations that will govern equity crowdfunding in America.
Widely anticipated for its perceived potential to unlock hundreds of millions of dollars in capital, entrepreneurs and policymakers alike have been understandably upset by the slowness of the process. Equity crowdfunding was billed as a solution to economic malaise as startups across the country would now be able to raise funds from any interested American and not just venture capitalists and accredited investors.
While most entrepreneurs have been focused on the SEC, an interesting development has taken place: states – acting as the laboratories of democracy, as Justice Louis Brandeis described – are taking steps of their own to legalize equity crowdfunding.
View:
Since 2011, 11 states have legalized equity crowdfunding through legislation or regulatory action. Crowdfunding and crowdfunding-related bills also have been introduced in more than a dozen states. This interest and activity holds promise for entrepreneurs, but important factors may limit the impact of intrastate equity crowdfunding.
Because state-based exemptions only allow companies formed in the state to raise money from residents of the same state, intrastate crowdfunding is restricted by geographic boundaries and the size of a state’s population. A startup in Maine is limited to a much smaller pool of potential investors, for example, than a startup in Georgia, a state almost eight times as large.
Anecdotal evidence also suggests that many entrepreneurs and potential investors may be unaware of the new intrastate exemptions. In Kansas, the first state in the country to legalize equity crowdfunding within its borders in 2011, fewer than 10 companies had utilized the exemption as of the end of April 2014. In other states, the changes are so recent that it remains unclear as to what extent entrepreneurs are informed and poised to raise capital in this manner.
Continue to the full article --> here
Equity Crowdfunding Saskatchewan Event May 28 by NCFA & Greater Saskatoon Chamber of Commerce Wrap-up!
NCFA Canada | Sunny Shao | May 21, 2014
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.
Sask. leads pack in equity crowdfunding activity
CJME News Talk 980 | by Karin Yeske | May 28, 2014
A Philadelphia CEO is so excited with Saskatchewan’s entrepreneurial spirit that he’s moving to Saskatoon to foster the province’s crowdfunding activity.
Les Schaevitz, CEO of Holistic Funding Systems Corporation, said Saskatchewan is blazing the trail in equity crowdfunding thanks to a new exemption announced in December 2013.
“Saskatchewan is the only province in all of Canada that has made regulations to allow this to actually happen,” Schaevitz said after speaking on a panel presented by the National Crowdfunding Association of Canada and the Saskatoon Chamber of Commerce. Highlights from the Saskatchewan Equity Crowdfunding Event here
The new portal allows entrepreneurs to raise capital by selling equity over the Internet to non-accredited investors.
Pending the acknowledgment of the Financial and Consumer Affairs Authority (FCAA) later in June, Schaevitz’s Equity Crowdfunding Venture Exchange and Equity Crowdfunding Enterprise Exchange will be soon be active in the province.
Equity crowdfunding is different than simply crowdfunding, where businesses or projects raise money through donations. Equity crowdfunding involves individuals investing in a company, product or service.
Before the new exemption, startups had to pay to deal with expensive rules before they could sell a stake in their company. Entrepreneurs can now skip the red tape with the exception to certain rules.
View: OSC Crowdfunding Prospectus Exemption and Portal Requirements - Request for Comments
The business and the investor must be located in Saskatchewan. The entrepreneur can raise up to $300,000 a year (two, six-month offerings of $150,000 each), and no investor can give more than $1,500 in an offering.
There are 225 equity crowdfunding portals worldwide. British Columbia, Alberta, Manitoba, New Brunswick and Nova Scotia are all looking at models similar to Saskatchewan. Ontario is proposing to allow companies to raise a maximum of $1.5 million in a year and individuals would be able to invest no more than $2,500 in a single offering to a maximum of $10,000 per year.
