Category Archives: Fintech Services
Bringing financial planning to the masses
Investment Executive | Greg Dalgetty | Sep 3, 2019
A new tool allows advisors to offer a “lighter financial planning experience” to smaller clients
Why go to the effort of creating a detailed financial plan for a client who won’t even read it? Or what if a prospective client wants help with financial planning, but doesn’t currently have enough investable assets for you to take them on?
MoneyGaps, a new tool for advisors, could be a solution to these issues.
The web-based platform offers a “lighter financial planning experience,” designed to make financial planning more understandable and accessible to the masses while still allowing advisors to make a buck, says company founder Preet Banerjee.
Advisors create their own MoneyGaps profiles using their headshots and logos, and the platform handles most of the rest.
“It’s not as time-intensive for the advisor, but it allows them to take on clients that they were otherwise turning away,” Banerjee said in an interview.
Banerjee, a former advisor who works as a consultant to wealth management, conceived of MoneyGaps while working on a research project for his PhD in business administration. His mission: to quantify the value of financial advice across different delivery channels.
See: Fintech is Driving Financial Inclusion
As part of the project, Banerjee hired an innovation lab to study the advisor-client relationship. The research found that financial plans were “one of the biggest common pain points” between advisors and their clients, he said.
“A lot of financial advisors have said, ‘We spend a lot of time creating these detailed plans — and sometimes they’re relatively thick financial plans — and we know that clients do not read them,’” Banerjee said. “MoneyGaps focuses on simplicity. Essentially what we’re doing is building a financial report card for people.”
The report card is generated by what Banerjee refers to as the platform’s “bread and butter” feature — a “gaps analysis” that gives a client letter grades based on their performance in eight financial categories: debts analysis, emergency fund, disability insurance, estate planning, life insurance, retirement planning, educational planning and cash flow.
The client answers a questionnaire for each category to receive a letter grade. MoneyGaps then assigns the client an overall grade (based on the average grade for each category), and advisors can generate a PDF report card for their client with the click of a button.
Banerjee described the report card as “very intuitive” for clients to understand. “That was critical for the MoneyGaps experience, in my mind,” he said.
Advisors have the option of overriding a letter grade if they choose to, although Banerjee said most advisors currently on the platform are happy with the grades generated.
See:
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Fintech Frenzy: Hype or Reality? A Closer Look at 6 Key Sectors
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Robocop vs. Terminator in Fintech; Comparing DeFi originations to Digital Lenders in the early years
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An investor’s guide to robo-advisors 2018
Advisors can also use MoneyGaps to provide recommendations to clients based on each gap analysis. The platform generates its own recommendations, such as creating a monthly budget for a highly indebted client, but advisors can also make custom recommendations.
For every recommendation, MoneyGaps automatically generates a reasons-why letter — the same as what’s currently required for life insurance recommendations — that explains the rationale for the letter grade a client received, what the advisor’s recommendation is and what the client’s decision is.
“The advisor would print this off, have the client sign it and keep a copy in the advisor’s records,” Banerjee said. “Not only is this good from a compliance point of view, it’s good for making clients really think about the decisions that they make.”
Reasons-why letters, which are two pages, are automatically dated and time-stamped, and a record of signed letters is kept in a decision journal. If, for example, a client who declined to buy life insurance died and the client’s spouse accuses the advisor of failing to recommend life insurance, the advisor would have the client’s signed reasons-why letter in the decision journal.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Accelerate—it’s time for insurers to move swiftly and decisively
McKinsey & Company | Johannes-Tobias Lorenz | Sep 30, 2019
In the past, speed was not critical for an insurer's success. The reality today is totally different. To flourish in the digital age, insurers must move swiftly—and decisively.
For a long time, the traditional insurance business model proved remarkably resilient. A robust regulatory environment, limited consumer interest, and large balance sheets safeguarded the competitive advantage against early digital attackers. But the picture today is different. Digital technologies are putting pressure on profit pools, and competition is intensifying as traditional industry borders blur and players from adjacent markets shake up the traditional insurance value chain to claim their stake. On top, the negative-interest-rate environment threatens the economic foundations of the industry.
See: Tesla Promises up to 30% Lower Insurance Rates with New Car Insurance Play
The good news: Traditional insurers remain in a strong position to flourish in the digital age. Most have customer access through their proprietary channels, strong and trusted brands, and actuarial expertise. These features make traditional insurers valuable partners in budding digital ecosystems that are evolving to offer both risk prevention and risk mitigation services. In addition, they also have large balance sheets that enable them to underwrite large risk pools. Today, most insurance companies have started applying new technologies within their organizations and are making strides in implementing digital solutions. However, the metabolic rate needs to increase to stay competitive in a polarizing “winners take all” environment.
How to move swiftly—and decisively
The strength of an insurer’s in-force book will not protect it indefinitely. Incumbents need to move quickly to compete with digital competitors that have the agility to keep pace with evolving technology and customer needs. Five key observations on speed can help guide insurers on the right track.
1. Know your strategy
Big moves that drive digital effectiveness need a strategy that is clear and adaptable. Indeed, these characteristics go hand in hand, as a clear vision of the future is more powerful when combined with learning through experimentation and realignment. Agile ways of working can lower risks at each step and create opportunities to mold strategic aims to new realities. Companies that achieve this flexibility while maintaining a clear vision can be quicker and more decisive in implementing their digital agenda.
See:
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Competition Bureau’s call for intel on anti-competitive conduct in digital economy raises eyebrows
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Element AI: The market is still figuring out how to share data with enterprise AI startups
2. Make speed manageable
Frequency matters. A powerful strategy to digitally transform an existing business model must be met by a manageable set of practices that support change week to week and quarter to quarter. Our research finds that top performers perform crucial tasks—such as learning about digital technologies, assessing the business model for digital-productivity opportunities, or sharing lessons learned from failed or successful tests—more frequently than other companies.
3. Do your homework (often)
What’s the fun in all the data if you’re not using it to make your organization better? A recent McKinsey study found that that 44 percent of top-performing companies collect and analyze customer data weekly or more frequently to identify new opportunities, compared with 16 percent of laggards, which tend to analyze customer data only monthly. Frequent analysis will allow companies to make bigger, better acquisitions and capital-expenditure decisions, scaling up what is working more rapidly and effectively.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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What does the future of banking look like, according to the experts?
Raconteur | Francesca Cassidy | May 1, 2019
New trends in finance, from open banking to the rise of fintech startups, are shaking the industry and putting customers at the heart of the future of banking,
What can traditional banks learn from fintechs?
What Bank Leumi and Pepper teach us is that both traditional banks and fintech companies have their strong suits, although
Mr Paris believes the relationship has gone through three phases:
- The first saw traditional banks detect fintech as a threat and attempt to squash them through regulation.
- The second came as the banking industry recognised the true value of fintech and set out to partner with or acquire them.
- We are now in the third phase. “Banks realise that simply acquiring a fintech company does not solve the problem, as the relationship is still one-to-one. What is needed is for a fintech to have access to thousands of banks and vice versa.”
See: Where Top US Banks Are Betting On Fintech
The question is, will traditional banks consent to?
Matthias Kröner, founder and former chief executive officer of the Fidor Group, one of Europe’s first digital banks, thinks not. “I don’t think a big bank corporation is culturally able to deal with innovation”, he says. “It’s a question of compliance. In order to embrace the innovation of fintechs, you need a special governance structure that allows for a fail-fast, laboratory approach. Traditional banks are too afraid of risk.”
One challenge for fintechs is keeping the innovation level high. The bigger an organisation gets, the more you have the tendency for everyone to lean back - Matthias Kröner, the Fidor Group
So what is the future of banking? It is certainly digital and, as a result, more open, more transparent, more ambitious. Most importantly, it lies in the hands of the customer. Any financial services provider looking to make it to 2030 must embrace this truth, and use all the digital and technological tools at their disposal to make their offering as customer-centric as possible.
What does the future of banking look like, according to the experts?
Ian Bradbury, chief technology officer for financial services, Fujitsu
“The next wave of digital banking solutions, enabled by advanced data analytics, APIs and Open Banking legislation, will go much further. We will see a seamless incorporation of financial and pseudo-financial services into daily activities, both digitally and in the physical world.”
See: Open banking has a big branding problem, government’s public opinion research suggests
Simon Paris, chief executive officer, Finastra
“My vision is that banking will go back to what it was born for. To provide a financial service. To help people and businesses unlock their potential. Instead of being about how many products per customer you have, it will be about customer’s exchanging their personal data for better service. You tell me how much you drive, and I’ll decrease your car insurance. You share your smart watch data and I’ll decrease your life insurance.”
Matthias Kröner, founder and former chief executive officer, the Fidor Group
“Customer demands for innovation never changed a market as much as changes in regulation, like we’ve had with open banking. PSD2 is finally forcing the banks to be customer-centric. It will mean an easier and better life for customers. I'm absolutely convinced of this. If we combine the success of data with AI and machine-learning - the sky is the limit.”
Flavia Alzetta, chief executive officer, Contis
“In terms of payments, I think the shift from physical assets to virtual or no assets will be very visible over the coming years. I spent 14 years at Amex, and I think the physical card will disappear. The more innovative payment options coming up - such as
biometrics - will simplify payments immeasurably.”
Rakefet Russak Aminoach, chief executive officer, Bank Leumi
“10 years from now the retail banks which take the right steps will be much more significant than they are today, and some will have ceased to exist. I don't think we will have one bank like one Amazon or one Google, I believe that we will have local winners. Regulators are a local thing, as are currencies, so I don't think we'll have one bank for the whole world, but I believe that, in each market, we will have a huge winner who will do the right thing and take a large part of the market.”
See: One size doesn’t fit all: Strict regulations meant for big banks holding back fintech in Canada
Michal Kissos Hertzog, chief executive officer, Pepper
“The CEO of AirBnB was asked a similar question. He said it doesn't really matter what AirBnb offers in 100 years - whether it is still a question of booking rooms online or not - if their DNA and culture stays the same, then AirBnb will stay relevant. Banking changes all the time, the value proposition and user experience will change.
Banks which will can change and stay relevant will survive, and the others will not.”
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Wealthsimple Acquires Tax Software Company Simpletax
CNW Wealthsimple Release | Sep 24, 2019
Two of Canada's leading FinTech companies join forces to continue providing smart, simple financial tools for Canadians
TORONTO, Sept. 24, 2019 /CNW/ - Wealthsimple, Canada's leading online investment service, announced today that it has acquired SimpleTax, a Canadian web-based tax preparation service that makes preparing and filing tax returns quick and easy. Together, the companies aim to further their joint mission of making financial tools simple and accessible to everyone.
The acquisition marks Wealthsimple's first expansion beyond saving and investing, with the SimpleTax software joining its growing lineup of financial products, including a leading investment service, a high interest smart savings account and Canada's first commission-free trading platform.
"Taxes are so ingrained in our lives, and like most financial services, the process of filing them is inherently complicated, challenging and expensive," says Michael Katchen, Co-founder and CEO, Wealthsimple. "We have admired SimpleTax for years. They are doing what Wealthsimple did for investing by making tax filing easy, accessible and affordable. By bringing SimpleTax into the Wealthsimple family, we're one step closer to simplifying people's financial journey over their lifetime."
See:
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Wealthsimple launching zero-commission trading platform
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Proposed Amendments to the GST/HST Treatment of Cryptocurrencies
"Wealthsimple shares our values and dedication to building something better. It's a perfect fit." says Jonathan Suter, Co-founder and CEO, SimpleTax. "We both set out to empower people with simple, honest, and transparent financial tools. Together, we can have an even greater impact."
Founded in 2012, SimpleTax has helped hundreds of thousands of Canadians prepare and file their taxes. The entire SimpleTax experience, including domain, client support and user interface, will remain the same for the 2019 tax season. Looking ahead, Wealthsimple will explore ways to enhance and complement the two brands with a more cohesive product experience.
With the acquisition of SimpleTax, Wealthsimple's innovative and low-cost products now help over one million Canadians simplify their finances. Wealthsimple aims to continue to expand its growing product lineup in an effort to reduce financial friction and become a leading digital financial institution.
About Wealthsimple
Wealthsimple is a financial company on a mission to help everyone achieve financial freedom by providing products and advice that are accessible and affordable. Using smart technology, Wealthsimple takes financial services that are often confusing, opaque and expensive and makes them simple, transparent, and low-cost. Wealthsimple provides services in the U.S., the U.K., and Canada. The company was founded by a team of financial experts and technology entrepreneurs, and is headquartered in Toronto, Canada. To learn more, visit www.wealthsimple.com.
About SimpleTax
SimpleTax is an award-winning Canadian tax software that all started with a few simple questions. Why is preparing my tax return so complicated? Why is tax software so slow and expensive? Why do so many people turn to tax preparers, even for simple returns? We believe Canadians deserve better: taxes should be easy and transparent enough to do them yourself; the cost to prepare a return should be fair; tax software should be friendly, fast, and fun. To learn more, visit www.simpletax.ca.
SOURCE Wealthsimple
For further information: Sarah Pattillo, spattillo@wealthsimple.com, 416-567-7844
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Tesla Promises up to 30% Lower Insurance Rates with New Car Insurance Play
TechCrunch | Kirsten Korosec | Aug 28, 2019
Tesla 
said Wednesday it has launched an insurance product, promising owners of its electric vehicles to deliver rates 20% and even as high as 30% lower than other insurance providers.
For now, the product known as Tesla Insurance, will only be available to owners in California. The business will expand to additional U.S. states in the future, Tesla said, without naming where or providing a timeline.
The announcement follows Tesla CEO Elon Musk’s promise back in April that the company would launch an insurance product “in about a month.” At the time, he said it would be “much more compelling than anything else out there.”
See: Fully automated decision making AI systems: the right to human intervention and other safeguards
The company argues that Tesla Insurance will be able provide insurance at a lower cost by leveraging the “advanced technology, safety, and serviceability of our cars.” In short, Tesla is saying that its deep insight and familiarity with its own vehicles gives it a better understanding of the technology and repair costs. This helps eliminate fees taken by traditional insurance carriers.
Tesla says the cost of each policy will be based on an individual’s driving record and “other factors that can typically impact a person’s insurance rates.”
The company says it won’t use or record vehicle data, such as GPS or vehicle camera footage, when pricing insurance. However, the company said it will use anonymized data taken from Tesla’s global fleet to help determine rates.
Musk made comments during a first-quarter earnings call with analysts in April that seemed to imply rates might be based on even more specific data, although he didn’t provide details. He said Tesla has an “information arbitrage opportunity,” explaining that it’s able to capture driving data, giving the company direct knowledge of the risk profile of the driver and car.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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The Solution To The Fintech IPO Shortage
Forbes | Ron Shevlin | July 1, 2019
OBSERVATIONS FROM THE FINTECH SNARK TANK
A Seeking Alpha article titled Why Fintech May Not Be Fit For Public Consumption states:
The year 2019 seems set to be a record-setting one for venture capitalist exit value capture by means of tech IPOs. But fintech doesn't seem to be a part of this picture. VCs are certainly putting money into fintech startups. There were 170 financings in the US in the first quarter of 2019. But, as Pitchbook says, 'not one of the most valuable fintech companies in the world seems particularly close to an offering.' "
The article chalks this up to three primary causes:
1. Poor IPO performance in 2018. According to the article, "One reason nobody is in a hurry to go public is that the results of the last crop of fintech concerns that did go public have been unimpressive. Adyen and IntegraFin are prospering, but neither GreenSky nor EverQuote is "lighting up the heavens" according to Seeking Alpha.
See: OurCrowd Double IPO Success Provides Crowdfunding Validation
2. Mega-round financing. Seeking Alpha postulates that investor interest in mega-rounds--e.g., Qatar Investment Authority's investment of $500 million in SoFi and Tiger Capital leading a round that raised $300 million for Coinbase--is another factor dampening interest in IPOs. According to Jim Marous, publisher of the Digital Banking Report:
With all of the mega-round investment in fintech firms, you would think more fintech players would cash out and go the IPO route. But why would successful fintechs, who appear to have a bottomless pit of funding at their disposal, subject themselves to the massive scrutiny that comes from going public? Fintech firms don't see a slowdown of the funding fire hose and have no desire to lose control of their vision."
3. Lack of scale. Seeking Alpha asserts that fintech "doesn't scale as easily as other sorts of tech," making fintech startups less likely to be IPO candidates. According to one veteran of the fintech startup scene (a founder and angel investor who now heads up technology innovation at a large bank, which is why he prefers to remain anonymous):
People underestimate the scale dynamics of financial services. You need a lot more maturity across all measurable KPIs before you can be successful in the long-term. In an ecosystem with these scale dynamics, if a fintech startup can use private capital at favorable costs to grow operations and monetize employee equity, and avoid the distracting microscope of quarterly filings, it's going to do so."
Pascal Bouvier, Managing Partner of Middlegame Ventures echoes this sentiment, but points out that there are startups who have achieved scale and still not gone public:
Stripe is an example of a fintech that should already be public--they've achieved scale. But for others, operational readiness at massive scale is key in order to go public. If you do not achieve repeatability in your core business you end up suffering post-IPO.”
The Business Model Factor
Scale is certainly a big part of the equation--but why aren't many fintech startups able to achieve scale? The answer may be their lack of a sustainable, viable business model. According to Brad Leimer, co-founder of Unconventional Ventures:
It's much easier for companies like Ayden and Klarna to go public because they have a profitable model out of the gate--they only need to achieve market share to achieve escape velocity. Fintechs have to figure out that there are alternative business models to the ones banks leverage today. The path toward more IPOs in fintech is to think differently about where the industry derives value in exchange for what they create for the consumer of business."
Interestingly, Leimer's two examples are B2B--not B2C--companies, and that might hold a clue to the dearth of fintech IPOs.
See:
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The Globalisation Of Fintech – The Australian Example (Part 1)
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Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunities
Many Fintech Startups Aren't Meeting The Criteria For Sustainable Growth
What must a fintech (or any) startup do to succeed for the long-term? To oversimplify matters, it must first either offer a new product or service to fulfill unmet needs or provide an existing product or service with innovations to marketing, distribution, service, and/or product and service features that enable it to compete with incumbents. And then second, it must either expand the market size and/or its set of offerings to sustain growth.
Too many B2C-focused fintech startups have come to market with existing products or services whose "innovation" is digital distribution and service. That's not enough of an innovation to thrive. The world of B2C fintech in the US is characterized by:
- Digital tunnel vision. Too many fintech startups suffer from Bank Displacement Syndrome--the belief that traditional banks can be displaced with nothing more than a digital product offering. Consumers who opened accounts with digital banks have done so because they want rewards, better interest rates, and/or better PFM tools--not because they want a "branchless" bank.
- Featurization. A number of fintech startups have hung their point of differentiation on capabilities like providing a "safe to spend" feature or getting one's paycheck a day early. Savings tools like Digit and Qapital do a great job of helping people save, but the service is tied to some larger solution (i.e., checking account) that they don't provide. This "featurization" of fintech is creating firms with business models that won't provide sustainable growth--and the market is not ready to believe that these firms can expand product-wise.
- High-risk lending strategies. After hitting a high of $25 per share in December 2014, Lending Club's stock price has been trading for less than $10 since the beginning of 2016. It shouldn't be a surprise. According to Pascal Bouvier, "Lending Club is an example of a fintech that should not have gone public--its credit portfolio wasn't mature enough." That's being generous. The firm's portfolio has been heavily weighted to credit card consolidation from sub-prime borrowers, and it hasn't successfully expanded market size or its offerings to create and sustain growth. The same can be said for some digital-only small business lenders.
Is there hope for the fintech IPO shortage?
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Crowdfunding for a Startup: How it Builds a Business’ Credibility
Guest Post | Aug 14, 2019
You see a need. You know that your new business can fill that need.
The problem is that it takes an incredible amount of capital to start a business. Besides purchasing equipment, raw materials, and computer systems, you also have the expenses that no one ever thinks about when opening a shop. Did you figure in the cost of hiring an accountant, a lawyer, and paying for workers compensation insurance?
Instead of heading to the bank with your business plan in hand, you may consider whether working with a crowdfunding site might be another feasible way to raise cash for your business expenses.
Here’s how crowdfunding sites work.
Cash in Exchange for Equity
Have you seen Shark Tank? On this TV show, investors decide whether or not they would like to provide capital for startups in exchange for a piece of the company. Sometimes the hosts compete against each other for the opportunity to invest. Sometimes they pool resources and form investment partnerships for a portion of ownership in the company. Occasionally budding entrepreneurs are sent away empty-handed.
See: Regulation Crowdfunding Surpasses $250,000,000 in Commitments The Model is Working but its Potential is Much Greater
Equity crowdfunding works in the same way. Using a crowdfunding website such as FrontFundr, your investors provide you with funding to move your business forward for a portion of the future profits.
Donations
Perhaps your business may provide a needed service or product for a blighted area. Maybe you are interested in starting a nonprofit group to serve the greater good. If this describes your scenario, you could seek donations from crowdfunding sites. The gifts can be used to get your idea up and running, and of course, there is nothing to repay. Interested? Check out FundRazr, Canada's leading donation-based platform, that has helped raise north of $130 million dollars for individuals and organizations.
Borrowing from Individuals
Instead of borrowing money from a traditional bank, you could borrow money from individuals leveraging the compliance and match making services of a platform like Lending Loop. You will still pay a set annual percentage rate like you would when taking out a conventional loan.
Rewards
Some investors are inspired to fund new businesses by an offer of a product, service, or gift they will receive in exchange for the cash donation. For example, if you are opening a car wash, perhaps investors will give you a set amount of money for you to purchase equipment with the idea that they will receive free car washes for six months after the business is up and running.
See: OurCrowd Double IPO Success Provides Crowdfunding Validation
If you had told someone twenty years ago that they would be able to collect cash from strangers over the internet to open a business or pursue a creative endeavor, they would have thought you were crazy. You could have found investors for your business, but only among your friends or family. Otherwise, entrepreneurs were forced to work with traditional banks who may not have been open to offering cash for products they couldn’t understand.
But when you receive money for your idea through crowdfunding, that means that you not only won the backing of a single loan officer at a lending institution. It means that dozens, hundreds, or even thousands of people think that your idea is good enough to support.
Crowdfunding sites have different specialties. Kickstarter connects creative people with resources they can use to bring their ideas to life. Kickstarter has helped artists, musicians, filmmakers, and designers. You no longer have to be a millionaire to be considered a patron of the arts.
Inventors often use Indiegogo, a crowdfunding website that has allowed entrepreneurs to raise over 1 billion dollars. Investors can receive equity in the company or receive a share in the revenue.
All you techies out there will appreciate Crowdsupply, a crowdfunding website for hardware designers and innovators. The hardware must be original, useful, and respectful.
Perhaps you already have a following, and you know you could increase your cash flow by offering exclusive content or behind-the-scenes experiences for your fan base. You may want to check out Patreon.
See: What You Should Know About Crowdfunding Your Start-up
There are several websites you can visit to help raise money for a nonprofit entity. Go Fund Me was started by Indiegogo. You could also visit StartSomeGood, which allows you to submit your project for free as long as you agree to pay a service fee of 5% of your project is fully funded.
If you are seeking funds to open a business, take a look at WeFunder. This website has more than 150,000 who are interested in keeping the American Dream alive. The site is quick to tell investors that they may undoubtedly lose their money on the investments since so many small businesses fail.
Do you have a dream, but you need to raise some capital to see it to fruition? Consider seeking the help of family, friends, and strangers through a crowdfunding website.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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