Category Archives: P2P, Lending, Digital Bonds, BNPL, Private Credit

March 30, 2016   Entrepreneurs, Start-ups, Small Businesses, FinTech and Alternative Finance, Fintech Opinions, Fundraising, Investing, Trading, Innovation and Resources, Legal Issues, Regulation, Consultation, P2P, Lending, Digital Bonds, BNPL, Private Credit   1 Comment

OPEN LETTER: Lifting the Veil on Peer-to-Peer Lending in Canada

NCFA Canada About Us | March 30, 2016

Open letter P2P lending

On behalf of the National Crowdfunding Association of Canada (NCFA), its members and affiliates, we would like to highlight the urgent need for governments and regulators to actively promote the growth and development of Canada’s nascent peer-to-peer marketplace lending (P2P Lending) industry to unlock potential benefits for borrowers and investors.

10 Facts about P2P Lending:

  1. P2P lending is an online method of debt financing that enables investors to lend varying sums of money to small business and individual borrowers.
  2. P2P lending transactions are cost-effective for borrowers and profitable investment opportunities for retail lenders.
  3. Institutional investors may also lend money over P2P platforms alongside retail investors. Many alternative lenders in Canada leverage the assets of a bank or fund (a financial intermediary) and lend those funds out to borrowers to create a better borrowing experience.
  4. P2P technology platforms match borrowers and lenders directly and provide a streamlined user experience, transparent financials and due diligence, and work to reduce friction and costs of the lending process typical of brick and mortar financial institutions.
  5. Leading-edge predictive data analytics enable P2P lenders to more accurately gauge the repayment potential of borrowers.
    • Zopa, the pioneering P2P British lender (established in 2005) has made £500 million Pounds in loans as of March 31, 2015 and has experienced only a 0.19% default rate since 2010 - and, that no lender with Zopa had yet lost a penny. (Unquoted, November 18, 2015)
    • The default rate of the six leading P2P lenders ranges from 0.00%(2/6) to 0.16%(1/6) to 0.71%(1/6) to 0.80%(1/6) to 1.5%(1/6) (Telegraph, Feb 17, 2016)
  6. Small and medium sized businesses (SMEs) are the backbone of the Canadian economy and employ 90 per cent of Canadians working in the private sector and produce approx. 30 per cent of the country's GDP (Innovation, Science and Economic Development, August 2013, Key Small Business Statistics). Access to cost effective financing powers business growth and is a strong economic generator for start-ups and SMEs who need capital and investors to fuel innovation, create jobs and compete on a the global stage.
  7. Many small businesses (and consumers) are rejected by traditional financial institutions when seeking financing because they do not fit rigid lending requirements of banks. Too often, this means their only recourse is to source funds from alternative or private lenders who charge rates well in excess of 20 per cent.
  8. As proven in 2008, the democratic nature of P2P lending helps to fill gaps during liquidity crunches by providing a funding option to small businesses and consumers who need to borrow. A healthy economy means borrowers and lenders have choice in the marketplace and P2P lending offers borrowers and lenders more choice.
  9. While P2P lending is nascent in Canada, it is recognized as a proven financial model and a significant source of economic growth in the innovation economy in several international jurisdictions such as the U.K. and U.S., both with their own set of regulations:
    • The U.K. government became a lender by investing £20 million into British businesses via P2P lenders in 2012. The intention of this was to inject capital into the economy that would end up in the hands of small business owners. A second investment of £40 million was announced in 2014 with ongoing support for these platforms being provided both monetarily and legislatively with the most recent examples being tax-free shelters for P2P investors and mandatory referral programs for borrowers from banks.
    • In the U.S., according to a PwC report titled, “Peer Pressure: How P2P lending platforms are transforming the consumer lending industry:
      • U.S. P2P platforms issued approximately $U.S. 5.5 billion in loans in 2014. Origination volumes have grown on average 84% per quarter since 2007.
      • PWC's analysis indicated that the market could reach $150 billion or higher by 2015.
    • In the US, online marketplace loan origination (including institutional investors) has doubled every year since 2010, to $12 billion in 2014 (Morgan Stanley research paper, June 17, 2015)
    • The trend is playing out globally, notably in Australia, China and the UK. All-told, such lending could command $150 billion to $490 billion by 2020
    • Marketplace Lending Is in Liftoff, With a 123% Compound Annual Growth Rate From 2010-2014
    • In New Zealand, the financial markets authority, the regulatory body overseeing financial markets, has adopted separate and distinct regulations for P2P lending here.
  10. Without a national securities regulator or nationally adopted set of rules, relying on the existing equity crowdfunding regulations for P2P lending transactions is very much like trying to put a ‘square peg’ into a ‘round hole’.

CALL TO ACTION: 

Call to action button

The National Crowdfunding Association of Canada (NCFA) urges governments and regulators to actively promote the growth and development of Canada’s nascent Peer-to-Peer (P2P) lending industry or risk being left behind other countries such as the U.S. and U.K. where P2P lending has developed into an essential element of their financial system.

Dan Breznitz, the co-director of the innovation policy lab at the Munk School of Global Affairs, noted that when it comes to financial innovation in peer-to-peer lending, Canada is “11 Years late to the party”.

A recent report he co-authored (published November 2015) on the development of Toronto’s financial technology ecosystem specifically states that “our regulatory system, is now seen by many to be an obstacle in the context of the evolving Fintech ecosystem”.

Further, many industry experts internationally have articulated the concern that Canada is vulnerable to a loss of control in our financial sector. With the rapid expansion of international platforms such Lending Club, Prosper, Funding Circle, Harmoney and Lufax, there is concern that these industry powerhouses may come into the Canadian market and dominate segments of the financial industry.

Five Keys to Unlocking P2P Lending’s Potential Benefits for Borrowers and Investors

  1.  Recognize that the recently adopted start-up, integrated and offering memorandum exemptions aimed at widening participation among retail investors to invest in start-ups and SMEs need to be reviewed to ensure regulations allow P2P lending markets to form, and to recognize that P2P lending is a viable source of capital for small businesses and can be a good investment opportunity for both retail and institutional investors.
  2. Ensure that Canada remains competitive by enabling this highly-innovative sector of the economy to catch up to other jurisdictions, ranging from the United States and Great Britain to New Zealand where P2P lending markets provide new, vibrant competition to established financial industry participants.
  3. Adopt a ‘no harm’ or ‘innocent until proven guilty’ policy that would allow existing P2P lending platforms to operate AND innovate in ways that will better inform regulators of the appropriate policy and framework required to enable efficient market capital formation while protecting investors.  For example, the regulatory sandbox program run by the FCA in the UK is incredibly forward thinking by a regulatory body that balances barriers, legal framework and safeguards while allowing the FCA to work alongside innovators to ensure more products can be tested for potential introduction to the market with the appropriate levels of consumer protection built in.
  4. Work together with the NCFA and its members to devise a quick-to-decision, proportionate regulatory framework that takes into account the organizational characteristics and unique business model of P2P lending stakeholders. In financial sector regulation, one size does not fit all.  Ensure that P2P lending operators do not have to start from scratch with every securities and financial sector regulatory body in the country but that agreement with one entity suffice for all as is the case in Great Britain with the Financial Conduct Authority.
  5. Permit investors participating in P2P loan investments to place their holdings within their RRSP’s and TFSA’s and allow these investors to take on fractional loan ownership stakes.

Peer-to-peer loan arranger Lending Loop, in talks with regulators, halts new loan requests

Conclusion:  Canada Risks Being Left Behind (again)

P2P lending in Canada is at an inflection point today with firms, lenders and borrowers all looking for clear signals from government and regulators that Canadians will finally also be able to fully participate in a global phenomenon that has seen an estimated U.S. $50 billion in loan originations since 2008 and U.S. $20.5 billion in 2015 alone.

What's at stake?  Otherwise, as borrower and investor demand pushes transaction volumes to established foreign P2P lenders and lending alternatives, the domestic Canadian industry is left trying to figure out how to build-grow a successful business without a competitive and clear regulatory framework.

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more About Us or visit ncfacanada.org.

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March 11, 2016   Entrepreneurs, Start-ups, Small Businesses, Equity Crowdfunding, Alternative Funding, Fintech and Networking Events, NCFA Blog, NCFA Supported Events, P2P, Lending, Digital Bonds, BNPL, Private Credit, Stories   No comments

Event Wrap-up: 2nd Annual 2016 Canadian Crowdfunding Summit on March 3 (Toronto)

NCFA Blog | March 11, 2016

The 2nd annual Canadian Crowdfunding Summit (#CCS2016) on March 3, 2016 brought together a diverse crowd of companies, investors, providers, industry experts and leaders in the crowdfunding, fintech and altfi sectors. Over 440 attendees were in attendance, including 75+ speakers, 30 sessions and 12 pitching companies.

View the #CCS2016 event website | photo album  | highlights video

2016 Canadian Crowdfunding Summit

Now in its second year, the Canadian Crowdfunding Summit (hosted by the National Crowdfunding Association of Canada) is Canada’s only national event on crowdfunding, alternative finance and fintech that brings together Canadian and international industry experts, leaders and innovators in the fast growing and lucrative crowdfunding alternative finance industry. With the newly released equity crowdfunding regulations across Canada and the emergence of marketplace lending and investment bank 2.0 platforms, 2016 is anticipated to be a year of exponential growth.

This year's Summit was officially opened by Ontario Finance Minister Hon. Charles Sousa, who endorsed the emerging industry, which helps build on the province's plan for economic growth and job creation.

Master of Ceremonies Michael Brancroft (Executive Producer of Bloomberg Canada TV and co-host of The Feed with Amber Mac on Sirius XM), Tim Jackson (EVP Corporate and Community Development, MaRS) and Craig Asano (founder and Executive Director of the National Crowdfunding Association of Canada) kicked off the summit at 8:30 am, with Hon. Charles Sousa ringing the opening bell.

 

View Official Opening Speech: 

Honourable Charles Sousa, Endorses Canadian Crowdfunding Industry at 2016 Summit

 

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Amar Njjar (CEO, R2CROWD), Tim Jackson (EVP Corporate and Community Development, MaRS), Hon. Charles Sousa (Ontario Finance Minister) and Craig Asano (Founder & Executive Director, NCFA Canada)

 

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Hon. Charles Sousa with the media.

Following the official opening came the Summit's keynote speaker Bill Morrow (founder and CEO, Angels Den), who discussed what it takes for a crowdfunding ecosystem to thrive in a country, and not just exist based on over 8 years of insight from having operated Angels Den in the UK and internationally. There is an implied assumption from most crowdfunding platforms that startups "just" need cash to get up and running... but cash is only #3 on most angel investor's list of important factors to consider, after passion / excitement about the company, and altruism.

Bill Morrow head of Europe and Asia's largest angel network, said "I was so impressed with the vibrant ecosystem that we have entered into negotiations with a partner firm and two professional service providers with a view to setting up Angels Den in Canada. Hopefully we will see Angels Den return next year as a full member of The Association and playing a fuller part in the running of this amazing event"

Following the keynote were a number of shorter TEDx-style talks and presentation on diverse topics covering Canadian and global market data and trends; the sharing economy; trust and transparency in the internet of money, diversity in crowdfunding; P2P lending and the future of banking; virtual reality; equity crowdfunding's impact on private and public markets, and marketing to millennials.

CF160302-219Teri Kirk (CEO, Funding Portal)

CF160302-248Ted Graham (Innovation Leader, PwC)
CF160302-271Bernd Petak (Founder and CEO, Finstripe) CF160302-286Amy Cortese (founder and editor, Locavesting)

CF160302-299Cato Pastoll (Co-founder and CEO, Lending Loop)

 CF160302-343Christopher Charlesworth (Co-founder and CEO, HiveWire)
CF160302-357Peter-Paul Van Hoeken (CEO, Frontfundr)

 

CF160302-366Sophie Nicolaou (Head of Marketing and PR, Lending Arch) and Ryan Laidlaw (FinTexpert, Lending Arch)

Next came the much-anticipated panel " Fireside Chat with Crowdfunding Rockstars" moderated by Mark Evans (Principal, ME Consulting) with panelists Daniel Blumer (CEO/Co-founder, Revol Technologies Inc, whose raised over $2.6 million USD for their Revols product - Bluetooth earphones that mold to the contours of a person’s ears, earning them the new record for Canada's top crowdfunding campaign; Behrouz Hariri (Co-founder, Smart Nora), raised more than $1 million USD in pre-orders for Nora, the non-invasive and smart snoring solution and Judeh Siwady (CEO/Founder, Spacefy), who recently raised capital through equity crowdfunding for Spacefy, which gives creators access to unique and under-utilized spaces while allowing space owners to further monetize their spaces.

 

Finally, the morning session wrapped up with an industry experts panel on Regulatory Perspectives: What to Expect in 2016 with securities lawyers, the Ontario Securities Commission, an founders of leading crowdfunding and crowdlending platforms moderated by Alixe Cormick (President, Venture Law Corporation) and panelists Daryl Hatton (CEO, Sponsifi & FundRazr), Monica Kowal (Vice Chair, Ontario Securities Commission), Jason Saltzman (Partner, Dentons Canada LLP) and Kevin Sandhu (CEO, Grow).

 

Then comes the mad dash to the buffet tables as lunch time rolls around! Several guests avoided the lines by going to R2CROWD's Lunch & Learn in the green room: How to Achieve 8-12% Annual ROI in Commercial Real Estate through Crowdfunding.

 

For Profit BusinessCast 'Live at the Summit' podcast --> Listen Now

Hosted by Robert Gold

 

After lunch, the crowd chose from 5 concurrent afternoon streams of workshops, panel sessions and live pitching. Here's a look at the highlights from the Main Stage (Auditorium B+C), where the following sessions took place:

  • 1:15 PM: The Emergence of Fintech in Lending: What it Means for Banks and Main St. [Moderator: Sarah Efron (Small Business Editor, The Globe and Mail), Panelists Kevin Clark (Co-founder and President, Lendified), Tabitha Creighton (CEO/Co-founder, InvestNextDoor) and Jeff Mitelman (CEO, Thinking Capital)]

 

 

  • 2:00 PM: Investment Strategies: Why Leading Angels/VCs are Joining the Crowd [Moderator: Sunil Sharma (Managing Partner, Extreme Venture Partners), Panelists Janet Bannister (General Partner, Real Ventures), Karen Grant (Executive Director, Angel One Investor Network) and Jim Orlando (Managing Director, OMERS Ventures)]

 

 

  • 3:00 PM: Market Makers: Equity Crowdfunding's Impact on the Innovation Economy [Moderator: Megan Cornell (Founder & CEO, Momentum Law), Panelists Sandi K. Gilbert (Founder & CEO, SeedUps Canada), Rubsun Ho (CEO, Crowdmatrix) and David Shore (Director, Investor Relations, OurCrowd)]

 

 

  • 3:45 PM: Hot Vertical: Real Estate Crowdfunding, an Emerging New Asset Class [Moderator: Brooks Barnett (Manager, Government Relations & Policy, Real Property Association of Canada), Panelists Ann Kaplan (CEO, Brix RCR), Amar Nijjar (President & CEO, R2Crowd) and Hitesh Rathod (CEO, NexusCrowd Inc.)]

 

 

 

 

Highlights from the Tactical Stream (Auditorium A), where the following sessions took place:

  • 1:15 PM: Big Data Investment Trends and Digital Finance Technologies [Moderator: Asier Ania (Co-Founder, HiveWire), Panelists Steven Dryall (Principal, Incipient Technologies), Craig O'Neill (CEO & Director, Versapay) and Angela Wang (Associate Director, Big Data, North America, UnionPay Smart)]

 

 

  • 2:00 PM: How Dubuc Motors, Canada's first EV car, is raising $25M in the US? [Moderator: Carlos Pinto Lobo (Chief Compliance Officer), Panelists Alixe Cormick (President, Venture Law Corporation), Mario Dubuc (Co-Founder & CEO, Dubuc Motors) and Mike Kakogiannakis (Co-Founder & COO, Dubuc Motors)]

 

 

  • 3:00 PM: The Marketplace Lending Opportunity for Banks and Institutional Investors [Moderator: Dr. Sean Geobey (Assistant Professor at the School of Environment, Enterprise and Development, University of Waterloo), Panelists Jeff Brown (Vice President, Community Banking, Meridian), Tabitha Creighton (CEO/Co-founder, InvestNextDoor) and Colin Kilgour (Co-founder, First Marketplace Group)]

 

 

  • 3:45 PM: Making the Most of Every Dollar Raised: Financial Planning for SMEs [Presenters: Darryl Irwin (Tax Partner, PwC) and Alan Lio (Senior Tax Associate, PwC)]

 

 

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Big Data Investment Trends and Digital Finance Technologies panel.

 

 

 

Highlights from the Tactical Stream (CR2), where the following sessions took place:

  • 1:15 PM: Crowdfunding Best Practices: Pre, Launch, and Post Campaign [Moderator: Christopher Charlesworth (Co-Founder and CEO, HiveWire), Panelists Bret Conkin (Founder & CEO, Crowdfund Suite), Khierstyn Ross (Founder & Podcaster, Uncut Entrepreneur) and Jaimy Warner (Executive Director, Raindance Canada)]

 

 

  • 2:00 PM: The Longest 40 Days of Your Life: AMA (Ask Me Anything) [Moderator: Sunny Shao (Advisor, National Crowdfunding Association of Canada), Panelists Gareth Everard (Co-founder, Rockwell Razors), Viktor Grabovskyy (Co-founder, Forever Spin) and Corey Herscu (President, Herscu and Goldsilver)]

 

 

  • 3:00 PM: Protecting Yourself, Your Business and Your Crowdfunding Investment [Moderator: Jeff Musson (President, Dynamite Network), Panelists Chantal Cipriano (Lawyer / Manager, Compliance, BMO Private Banking), Marvin Huberman (Barrister, Mediator, Arbitrator, Marvin J. Huberman) and Monica Tigleanu (Financial Institutions Underwriter, AIG)

 

 

  • 3:45 PM: Community Capital and Locavesting [Moderator: Amy Cortese (Founder & Editor, Locavesting), Panelists Jennifer Bryan (Community Investment and Marketing Manager, SolarShare), Trish Nixon (Director of Investments, CoPower) and Adam Spence (Founder & Director, The SVX, MaRS Centre for Impact Investing)

 

 

 

Highlights from the Meet & Greet (Green Room), where the following sessions took place:

  • 1:15 PM: Meet & Greet with Dentons: Crowd Financing Options for Start-Ups [Kris Miks (Senior Associate, Denton and Jason Saltzman (Partner, Dentons Canada LLP)]
  • 2:00 PM: Presentation & Discussion by OSC: Ontario's Crowdfunding Regime (MI 45-108) [Maria Carelli (Senior Accountant, Compliance and Registrant Regulations, Ontario Securities Commission) and Rick Whiler (Senior Accountant, Corporate Finance Branch, Ontario Securities Commission)]
  • 3:00 PM: Hosted by NexusCrowd: Crowdfunding Real Estate Primer for Accredited Investors [Hitesh Rathod (CEO, NexusCrowd Inc.)]

 

Meet & Greet with Dentons: Crowd Financing Options for Startups

Meet & Greet with Dentons: Crowd Financing Options for Startups

Meet & Greet with the Ontario Securities Commission.

Meet & Greet with the Ontario Securities Commission.

 

And last but certainly not least, highlights from the Live Pitching stream (CR3) where 12 startups pitched in front of a panel of judges and the crowd for "Front of the Line" Golden Tickets to CBC Dragon's Den auditions.

  • 1:15 PM: Live Pitching Live Pitching 1 – Session Lead: DMZ (post-revenue)
    Pitchers: Pinnguaq (Ryan Oliver), SmartHalo (Xavier Peich), Riipen (Richard Tuck)
    Judges: Bill Morrow (Angels Den), Sherif El-­Tawil (DMZ), Kathryn Wortsman (MaRS)
  • 2:00 PM: Live Pitching Live Pitching 2 – Session Lead: Founder Institute (pre-revenue)
    Pitchers: Vizwik (Simon Gauvin), Flipd (Andres Moreno), Rna Diagnostics (John Connolly)
    Judges: Kamal Hussein (IncMind), Dr. Marat Ressin (YEDInstitute), Russell Samuels (Whitecap Venture Partners)
  • 3:00 PM: Live Pitching Live Pitching 3 – Session Lead: Startup Canada (post-revenue)
    Pitchers: Stashbelt (Jonah Brotman), Comfable (Neda Ghazi), The Sharing Depot (Ryan Dyment)
    Judges: Sean Burke (Frontfundr), Jim Orlando (OMERS Ventures), Sean Wise (Ryerson University)
  • 3:45 PM: Live Pitching Live Pitching 4 – Session Lead: MaRS (3:45 PM pre-revenue)
    Pitchers: Yirego (Megan Savage), NERv (Amr Abdelgawad), Eye-LIVE (Murray McKercher and David Baker)
    Judges: Ben Zlotnick (INcubes), Mark Skapinker (Brightspark Ventures), Anthony Lipschitz (Thinking Capital)

 

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Richard Tuck pitching Riipen.

 

Ryan Oliver pitching Pinnguaq.

Ryan Oliver pitching Pinnguaq.

 

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Xavier Peich wins the first live pitching session with SmartHalo.

 

 

 

Simon Gauvin pitching Vizwik.

Simon Gauvin pitching Vizwik.

 

Andres Moreno pitching Flipd.

Andres Moreno pitching Flipd.

 

John Connolly wins the 2nd live pitching session with Rna Diagnostics.

John Connolly wins the 2nd live pitching session with Rna Diagnostics.

 

 

 

Jonah Brotman pitching Stashbelt.

Jonah Brotman pitching Stashbelt.

 

Neda Ghazi pitching QTempSmart, Comfable's flagship product.

Neda Ghazi pitching QTempSmart, Comfable's flagship product.

 

Ryan Dyment wins the 3rd live pitching session with The Sharing Depot.

Ryan Dyment wins the 3rd live pitching session with The Sharing Depot.

 

 

 

Amr Abdelgawad pitches NERv Technology.

Amr Abdelgawad pitches NERv Technology.

 

Murray McKercher and David Baker pitch Eye-LIVE Media.

Murray McKercher and David Baker pitch Eye-LIVE Media.

 

Megan Savage wins the final live pitching session with the Drumi, Yirego's flagship product.

Megan Savage wins the final live pitching session with the Drumi, Yirego's flagship product.

 

 

The crowd gathers back in the main auditorium for the closing panel, closing keynote and closing remarks for the day, including a power panel of experts discussing the future of crowdfunding and the democratization of finance moderated by Erin Bury; a look at P2P decentralized networks by Anthony Di Iorio, who raised over $18 million for his Ethereum crowdfunding campaign (the 5th largest crowdfunding campaign in the world, also partially funded by bitcoin); and finally closing remarks by Adam Nanjee, Head of Fintech at MaRS.

 

 

 

Big thanks to everyone who attended this year's Summit and all the sponsors, speakers, community partners and volunteers who helped make this event possible! We hope to see you again in 2017!

 

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View the #CCS2016 event website

View the #CCS2016 photo album

THANK YOU TO ALL OUR #CCS2016 SPONSORS AND PARTNERS:

All Sponsors

All Partners

 

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more About Us or visit ncfacanada.org.

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March 10, 2016   FinTech and Alternative Finance, Legal Issues, Regulation, Consultation, Online Funding / Investing Portals, P2P, Lending, Digital Bonds, BNPL, Private Credit, Stories   No comments

Peer-to-peer loan arranger Lending Loop, in talks with regulators, halts new loan requests

Financial Post | Barbara Shecter | March 1, 2016

Lending Loop - A smarter way to lendLending Loop, a Canadian fintech firm that was extending U.S.-style peer-to-peer crowdsourced loans to small businesses, has stopped posting new loan requests on its website while it meets with regulators to ensure its model “complies with all applicable laws.”

A notice to that effect was posted on the company’s website Tuesday.

Notice: Loan Requests March 1, 2016

Lending Loop is currently engaged in discussions with the appropriate securities regulatory authorities to ensure that its model complies with applicable laws. As an act of good faith, we have decided to voluntarily and temporarily halt the posting of new loan requests on our website during this period. Lending Loop will, however, continue to fund loans with its own financial capital and/or the financial capital of investors of Loop Financial Inc. Additionally, Lending Loop will continue to service all funded loans during this period and all existing lending partners will be able to access their Lending Loop accounts, and withdraw available funds at no cost.

See:  UK Alternative Finance Grows by 84% to £3.2 Billion in 2015

The halt in the posting of new loan requests by the marketplace lender was characterized as “voluntary and temporary” and “an act of good faith.”

The notice did not name the regulatory authorities Lending Loop is in discussions with, but the Ontario Securities Commission issued a public notice to all marketplace lenders last year, urging them to seek legal and regulatory advice to ensure their operations were complying with securities law or relying on appropriate exemptions.

Lending Loop launched in October and the founders were coy about how the firm was able to offer U.S.-style peer-to-peer lending. The model allows anyone with $50 to pool their money in larger loans that are extended to small businesses.

Other marketplace lenders such as Borrowell and Grouplend, which is now called Grow, opted to tap only  institutional and well-heeled “accredited” investors to back loans in order to ensure they are onside with regulators.

Cato Pastoll, one of the founders of Lending Loop, said his firm’s peer-to-peer model was popular among those who don’t meet the income and asset thresholds to be considered accredited investors. After launch, Lending Loop quickly attracted interest from 450 individual lenders, with 100 becoming active participants, Pastoll told the Financial Post in November.

Continue to the full article --> here

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more About Us or visit ncfacanada.org.

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March 8, 2016   FinTech and Alternative Finance, Legal Issues, Regulation, Consultation, Online Funding / Investing Portals, P2P, Lending, Digital Bonds, BNPL, Private Credit, Voices   No comments

New crowdfunding rules attract U.S. lenders to Canadian companies

The Globe and Mail | Clare O'Hara | March 2, 2016

iStock_000060595880_Large

New entrants are arriving to Canada’s crowdfunding scene now that regulators have provided further clarity on rules for the burgeoning industry, opening up fresh opportunities for both investors and small businesses.

Earlier this year, several new crowdfunding rules were announced that allow retail investors the ability to participate in the raising of capital for small businesses. Marketplace lenders, also known as peer-to-peer lenders, typically link up borrowers who are looking for capital with investors that are looking for higher-than-average returns.

In Ontario, a new offering memorandum exemption was implemented allowing retail investors to be able to invest up to $10,000 into the private capital markets annually. (Some higher-earning individuals earning could invest more if they received professional advice.) At the same time, Ontario has introduced a crowdfunding exemption where companies are now able to raise funds from retail investors publicly online once they register a funding portal with provincial securities regulators. Investors can invest $2,500 per company – up to a maximum $10,000 total in the same calendar year.

Related: Recent Regulatory Developments in Equity Crowdfunding in Canada

Regulators in British Columbia, Alberta, Saskatchewan, Manitoba and New Brunswick finalized an investment dealer prospectus exemption that allows any investor who has obtained advice about the suitability of the investment from an investment dealer to participate directly in private placements.

With the new regulations, some U.S. lenders are now looking to set up shop north of the border.

U.S. player InvestNextDoor is in the process of registering in Canada as an exempt market dealer – a firm that is able to sell investment securities that haven’t been qualified by a prospectus due to regulatory exemptions. Its Canadian site – investnextdoor.ca – will become the next online marketplace lender for Canadian small businesses looking to raise funds, as well as for investors looking for alternative investment options.

Related: InvestNextDoor Brings Trillion Dollar Marketplace Lending Opportunity to Canada and Introduces New Fixed Income Asset Class to Canadians

The U.S. platform launched two years ago in Washington by Canadian co-founders Tabitha Creighton and Lisa Ohman. The two female co-chief executive officers originally planned to start their company in Canada. But due to the regulatory environment at the time – and the lack of lenders in the Canadian industry space – Ms. Creighton says they decided to enter the more mature U.S market.

“At the time, there were far too many things left unclear in the Canadian market, so we looked at what was happening from a regulatory perspective at the U.S. peer-to-peer lending space,” Ms. Creighton says. “We were waiting for the Canadian industry to catch up to the U.S one.”

Related: Let’s cheer – not fear – the rise of ‘fintech’ alternative lenders

The peer-to-peer lending market has been a difficult industry to navigate for new entrants. Up until now, many providers would fund loans exclusively from accredited investors – those who typically have a net worth of $5-million or $1-million of investable assets – or from institutions.

Online lender Lending Loop, which launched last fall prior to the new crowdfunding rules, was the first Canadian provider to allow retail investors access to the private capital market. But it has since temporarily halted any new loan requests on its online marketplace. In a company blog post dated on Tuesday, the company wrote it is “currently engaging in discussions with the appropriate securities regulatory authorities.” Company officials would not comment further when contacted by The Globe and Mail.

Now, with the regulatory landscape changing in Canada, new entrants won’t be testing the waters before launching. InvestNextDoor is opening a separate platform for Canadian small business and retail investors that will allow them to either invest directly to a particular company listed on an online marketplace or they can join a community fund. The community fund will allow investors to select a region or city that they want to participate in and includes 50 to 100 local businesses who seek funding.

Related: The real fintech threat for the Big Six

“Investors really do want to invest locally – when we conducted our early stage research we found that investors wanted to invest in markets they were comfortable with and ones they associate with– such as their own community,” says Ms. Creighton. “That aspect was often more important for investors than what their return would look like.”

Canadians will be able to invest a minimum of $500 and select investment terms of six months to five years. Interest rates for the investors anywhere from 6 per cent to 25 per cent, although the average return on investment hovers around 12 per cent to 13.5 per cent, Ms. Creighton says. The return doesn’t come without risk, and investors should be aware of the higher risk involved with private capital investments.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more About Us or visit ncfacanada.org.

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March 4, 2016   FinTech and Alternative Finance, Fundraising, Investing, Trading, P2P, Lending, Digital Bonds, BNPL, Private Credit   No comments

The real fintech threat for the Big Six

The Globe and Mail | David Berman, March 4, 2016

CCS2016 online lending marketplace panelOnline lenders who provide short-term loans to small businesses say that Canada’s big banks have nothing to fear from their success – but the search for talent and the speed with which they can develop technology is certainly making the banks sit up and take notice.

“I’m not sure we are necessarily threatening them,” Kevin Clark, president of Lendified and a former executive at Bank of Nova Scotia, said during a panel discussion at the Canadian Crowdfunding Summit in Toronto on Thursday.

Jeff Mitelman, chief executive officer at Thinking Capital – a lender that struck a co-branding partnership with Canadian Imperial Bank of Commerce in November, giving them the credibility to attract new customers – agreed: “Our experience has been overwhelmingly positive,” he said.

In both cases, the companies provide small loans that the banks might not otherwise make.

A third panelist, Tabitha Creighton, CEO of InvestNextDoor, a marketplace lender that connects investors with small businesses, said that the banks haven’t yet embraced this style of lending because it is too costly relative to the potential profit.

But the bank-hugging only went so far. In outlining how they are part of a financial technology – or fintech – wave that promises to disrupt traditional finance, the executives argued that they enjoy a number of advantages over established lenders.

First, they are nimble, or faster than the banks at responding to consumer expectations that are being set by the likes of Uber, Amazon.com and Netflix. Mr. Clark pointed out that the big banks are trying to develop a fintech culture within their centuries-old businesses.

See:  New online lenders make it easier to get small businesses loans

“It’s a huge task,” he said, where speed is measured in quarters and years, in stark contrast to the days it takes a fintech firm to respond to an idea.

Second, online lenders appeal to the millennial generation which, if you agree with some of the generalizations about these 20- and 30-somethings, is more likely to embrace non-traditional lenders and make online financial transactions – offering what Ms. Creighton called “a massive shift in the role of banks serving entrepreneurs.”

And third, they are lean. Thinking Capital has a staff of about 200; at Lendified, there are just 15, three of them armed with PhDs.

Continue to the full article --> here

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more About Us or visit ncfacanada.org.

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March 1, 2016   FinTech and Alternative Finance, Fundraising, Investing, Trading, P2P, Lending, Digital Bonds, BNPL, Private Credit   No comments

InvestNextDoor Brings Trillion Dollar Marketplace Lending Opportunity to Canada and Introduces New Fixed Income Asset Class to Canadians

InvestNextDoor | Tabitha Creighton | March 1, 2016

InvestNextDoor Launches in CanadaTORONTO , March 1, 2016 /CNW/ - After a highly successful launch south of the border, InvestNextDoor is bringing its award-winning, "Borrowing 2.0" business model home to Canada . Capitalizing on the new national regulations which allow Canadians to participate in investing and capital raising for small businesses, InvestNextDoor delivers a model that seeks to reduce investment risk in current market conditions, and focus on above average fixed-income returns for retail and institutional investors.

Owned by two Canadian female entrepreneurs, Tabitha Creighton and Lisa Ohman , the easy-to-use platform is the first of its kind to solve the issue of access to capital, using debt securities instead of traditional lending structures. It connects investors with hardworking business owners providing access to the same returns as banks and private equity firms.

"Small businesses deserve to have access to the same financing options available to their large corporate counterparts. Our platform does just that, using a securities-based lending model that allows business owners to conveniently apply online and use the power of their community relationships," says Tabitha Creighton , CEO and co-founder of InvestNextDoor. "This is a long overdue opportunity for retail and institutional investors, as well as the small business owners who can now access new sources of borrowed capital at competitive rates never available to them before."

See InvestNextDoor, CEO - Tabitha Creighton, Speak at the 2016 Canadian Crowdfunding Summit on March 3

Small business debt-financing needs in Canada are increasing and doubled from 2007-2011 as big banks appear to be pulling back from small business lending, leaving a credit gap of at least $3B annually. At the same time, recent research suggests there is $75B in consumer cash sitting on the market sidelines, looking for something in which to invest.

InvestNextDoor has created a patent-pending benchmark rating model that creates transparency and aligns to global securities indices. Using data from credit agencies that maintain some of the largest databases of commercial financial obligations in Canada and the United States , InvestNextDoor applies the first algorithm of its kind for evaluating publicly accessible small business debt securities. A four-step due diligence process during underwriting allows them to evaluate a borrower's credit and assign a benchmark interest rate in less than 24 hours.

How it Works

  1. Businesses apply to borrow using a simple online application.
  2. The company's underwriting and benchmark pricing model are applied and businesses are informed of approval decision within 24 hours.
  3. Investors review and make offers of investment.
  4. Repayments are monthly, with fixed amounts comprised of principal and interest, and are handled through the company's SAAS platform.

Meridian, the largest credit union in Ontario , has become the first community banking partner. "Small businesses account for more than 90 per cent of companies in Canada and play a large role in job creation so their success has a major impact on the economy," says Bill Whyte , SVP and Chief of Member Services with Meridian. "By working with InvestNextDoor, Meridian is able to support our small business Members with access to additional capital, and investors with unique opportunities that support their communities."

Supporting economic growth in communities is a priority for both InvestNextDoor and Meridian. By making the investing process easy, people can now invest in local community businesses they want to support.

How Marketplace Lending is Disrupting Consumer Loans in Canada

"Our business is evolving both investment models and small business lending, by taking a page from Bay Street and making it applicable and accessible to small businesses," says Creighton. "This solves the issue of access and supply, using technology as an efficient way to transform lending. It's a win-win-win situation because when businesses prosper, so do investors and the communities."

The company is in the process of registering as an Exempt Market Dealer. Until it receives its registration, it will focus on supporting community education and outreach, to educate businesses and investors about issues surrounding small business credit.

About InvestNextDoor:
InvestNextDoor's mission is to democratize small business borrowing, by making investment in small business an accessible and cost-effective choice for everyone. Focusing on communities amplifies the economic effects of consumer investment in small businesses by keeping more of the benefits of the borrowing lifecycle within a given community. For more information please visit: https://investnextdoor.ca/.

SOURCE InvestNextDoor Canada

 

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more About Us or visit ncfacanada.org.

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February 28, 2016   Entrepreneurs, Start-ups, Small Businesses, Equity Crowdfunding, Alternative Funding, Fintech and Networking Events, Fundraising, Investing, Trading, Innovation and Resources, NCFA In The News, P2P, Lending, Digital Bonds, BNPL, Private Credit   No comments

Is Crowdfunding Turning Contagious?

Huffpost Business | Ian Khan |  Feb 26, 2016

With so much innovation going on around us, funding the cause is one of the top priorities of any entrepreneur. With popular crowdfunding websites like Kickstarter, Indiegogo and many others, entrepreneurs, inventors, designers and fanatical believers of their products have created a new niche of raising funds to make their dreams a reality. As opposed to traditional financing and even newer financial models that include Venture capital, this is the world of crowdfunding.

On Kickstarter alone, over $2 Billion worth of pledges have been received for over 100,000 successfully funded projects. On Indiegogo, another popular crowdfunding platform, more than $800 million has been raised. One of their most popular campaigns includes Flow Hive that raised more than $12 Million from 37.000 backers in more than 15 countries.

Let's take a step back and think about the real success of the crowdfunding industry. It has its own challenges. While we can speak about the glory and the wins, keep in perspective that these successful campaigns form less than 10 percent of the total campaigns on some of these platforms. The "democratization of crowdfunding" is definitely a phenomenon that is happening right now, but whether it is a good or a bad thing needs to be decided. Maybe this will help!

Crowdfunding is really the model that has existed for years and has been utilized by the likes of charities and nonprofits for decades. Dependent on the collection of funds form a large number of people to fund an initiative or a goal, now the industry has reached a stage where full blown products have been launched using the concept. Crowdfunders are most of the times a recipient of some kind of a return such as a mention on the website, a thank you note or an acknowledgment. Many times the level of return increases to being able to receive a product or multiple products with incentives as the stakes get higher.

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My most favorite part about crowdfunding is the pure level of innovation it is fueling. By eliminating the need to go through a complicated financial cycle to make a product or an idea come to life, it has opened the doors to everyone that really believes in the value they can offer. Some of the most successful crowdfunding campaigns has raised amounts as high as $109 Million. Check out this list of some popular campaigns.

Despite the success and opportunity presented by crowdfunding, the industry still faces multiple challenges. These are at regulatory, process, and industry level. Crowdfunding is a massive disruptor and can dramatically change the banking industry as it hits the mainstream. How will that affect how Banks operate and manage their relationship switch businesses this can also have global impacts as banks work across borders and in multiple countries and regions. There are also risks associated with default and business failure. According to IOSCO Market Intelligence, start up businesses in some circumstances have 50% chance of failing within the first 5 years. The industry also needs governance and thought leadership and many venues for this are opening up.

In the next week, Canadian crowdfunding experts will converge at the National Crowdfunding Association of Canada conference, one of the few dedicated crowdfunding events in the region, to discuss how the industry functions, the challenges and opportunities. What will be interesting to see are the levels of discussions that will take place and how regulators, providers and experts discuss and tackle the challenge of the industry at large. Is crowdfunding becoming a phenomenon more than just a financing scheme ? It definitely is !

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LAST CHANCE To Register for March 3

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more About Us or visit ncfacanada.org.

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