Campaign can double as a savvy marketing tool
Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: NCFA In The News
For immigrant entrepreneurs, financing is a big problem
The Globe and Mail | CAMILLA CORNELL | June 6, 2016
When Ralston De Zilva moved to Winnipeg from Sri Lanka eight years ago, he longed to start his own business. But he had no credit history in Canada, and little in the way of assets.
“There’s a huge initial expenditure associated with moving your whole family to Canada,” he says. “It takes you quite a number of years to again build your capital.”
It wasn’t until a year and a half ago, when Mr. De Zilva’s sister, Amanda, arrived that he felt ready to launch launch Chizma Tea Company – a retail shop and online purveyor of premium Ceylon teas.
Amanda had contacts with several large tea companies in Sri Lanka, and Mr. De Zilva had a good grasp of the business culture here. Together, the pair began to seek out financing.
The problem: like many immigrants to this country, the De Zilvas had nothing to use as collateral for a loan. Even a bank Mr. De Zilva had worked for in the past was only willing to pony up $2,000. “That would not have taken me anywhere,” he says.
Statistics Canada figures indicate newcomers tend to be drawn to entrepreneurial activity. By the end of the 2000s, about 19 per cent of immigrant workers were self-employed, compared with 15 per cent of those born in Canada. And a 2013 Government of Canada report shows 21. 7 per cent of small to mid-sized enterprises had a majority owner or CEO born outside of Canada.
Yet they face some unique barriers to getting their businesses off the ground. Apart from the fact that English may not be their first language and they may be unfamiliar with the business culture here, they often have a tough time getting financing, says Julia Deans, CEO of Futurpreneur Canada.
See: Recent Regulatory Developments in Equity Crowdfunding in Canada
“They may not have a network of friends and family to help them get the ball rolling,” says Ms. Deans. “That’s often the first port of call when you’re setting up a business.”
On top of that, they usually don’t have a Canadian credit history. And if they haven’t yet found a permanent place to live, they can’t even get a bank account, she adds. “That makes them pretty high-risk in the view of traditional lenders.”
Nonetheless, there are funding options that lend themselves particularly well to new Canadians: Here are four of them:
Look for government loans
After several banks turned Mr. De Zilva down for a loan, he came across Futurpreneur Canada’s Newcomer Program through an online search. Not only did the De Zilvas get help honing their business plan and access to a business mentor for two years, they snagged a $15,000 collateral-free loan.
That enabled them to create a professional website, do some marketing and stock the shelves of their first shop. In March, they opened Chizma Tea Collections at Winnipeg’s downtown Cityplace mall.
Applicants for the Newcomer Program must be 25 to 39 and have been in Canada for less than 60 months (Amanda De Zilva qualified). They’re eligible for $15,000 loans, or as much as $45,000 if they already have a credit history in Canada.
See: 2016 Canadian Crowdfunding and Online Funding Directory
Loans can be repaid at any time, usually over a five-year term and the interest rate “is slightly lower than the bank rate,” says Ms. Deans. “Because we are a not-for-profit, we can take a greater risk.”
To find other helpful government programs, do a search of 15,000 funding sources at fundingportal.com, suggests Teri Kirk, CEO of Funding Portal Inc. Plug in a few details about yourself and your business and Funding Portal turns up provincial and federal government funding sources.
Build a network
Ms. Deans suggests reaching out to the chamber of commerce in your home city, as well as ethnic chambers of commerce (most have national offices), such as the Indo Canadian Chamber of Commerce or the Chinese Professionals Association.
The latter, in particular, “understands the transition you’re making and they can help build your network right away,” she says. “They may even be sources of financing.”
You can also search out angel investors or venture capital firms who may be able to provide financing through websites such as the Canadian Investment Network (which offers an online matching service for entrepreneurs and investors) and through Funding Portal (which keeps information on private funding sources as well).
See: Crowdfunding best practices - launch only when you're ready!
Get a crowd on your side
When Jamil Kahn of Toronto designed a new kind of parka with gloves, hat and scarf built right in, he didn’t even consider going to the banks for funding. “They want to see three years of cash flow,” he says.
Instead Mr. Kahn, a computer programmer who came to Canada from Pakistan in 2009, launched a Kickstarter crowd funding campaign. Apart from the Kickstarter fees of 8 to 10 per cent (payable only at the end of successful funding campaigns), it cost less than $1,500 to develop a catchy video of a few friends in the prototype.
As a result, Mr. Kahn was able to presell his SmartParkas for $320 each (they will retail for $600 to $750), raising almost $3.26-million to get his company, North Aware Inc., off the ground.
“Crowdfunding is an enabler to many underserviced populations, including newcomers to Canada,” says Craig Asano, founder and executive director of the National Crowd Funding Association of Canada (NCFAC).
“It allows you to showcase your product or service to the market and get on the first step of the funding escalator. And it offers a choice for resourceful entrepreneurs who are often turned down by the banks.”
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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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Building a better brand through crowdfunding
Campaign can double as a savvy marketing tool
Jamil Kahn was a software developer with no background in the fashion industry when he came up with an idea for a new kind of parka that would have gloves, hat and scarf built right in.
“It was prompted by the inconvenience of having to shove my gloves and scarf in my coat all the time,” he says. “It just made sense to make them part of the coat. And the technology is there to make it happen, so why not?” The upshot: in 2015, Kahn quit his job to concentrate on his Smart Parka.
The question was how to fund it. Going to a bank wasn’t an option. “They want to see three years of cash flow,” he says.
While he could have attracted some angel investors, Kahn opted to crowdfund the venture. For less than $1,500, he hired a videographer and crafted a catchy video that showed some of his friends wearing the prototype jackets.
Kahn’s launch became the most funded campaign ever run on Kickstarter Canada, raising almost $3.28 million to get his company off the ground by pre-selling the coats for about $300 each (they will retail for $600 to $750).
See:
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Smart Parka breaks Canadian Kickstarter record, earning $3M
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Crowdsourcing – A Powerful Marketing Tool for Startups
Even better, he created the kind of buzz that got him noticed by the national — and even international media. And all those backers were potential brand ambassadors, showing the video to others and talking up the product. “Kickstarter can turn a company into a brand for zero dollars,” Kahn says.
Craig Asano, founder and executive director of the non-profit National Crowdfunding Association of Canada, agrees. Crowdfunding can be “a tremendous marketing platform for small businesses and startups in particular,” he says. “With crowdfunding, you’re really, in a sense, going public, in that there are a lot of eyeballs tracking you.”
While many small businesses fly under the radar of conventional media because they don’t have big marketing budgets, they often have “an incredible story to tell,” says Asano, “and crowdfunding allows journalists to connect with them.”
It’s also a great way to assess risk by testing a new product or service before a full launch. “It’s a channel to your customers, who could become backers,” says Asano. “That is the best direct marketing: there’s engagement and interaction. People can ask questions of the founders.”
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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.
Financing evolves to let companies capitalize on the crowd
Vancouver Sun | Derrick Penner | April 22, 2016
Before Guusto co-founders Skai Dalziel and Joe Facciolo tried crowdfunding to raise money for the online gift-giving startup they’d spend two years building, they tried the usual venture-capital routes.
They had put their own money in, recruited some friends and family and were making the rounds of startup pitch sessions to woo potential angel investors. (They even made an unsuccessful trip to CBC’s Dragons’ Den.)
Many of the angels, though, wanted to see more of a track record from the business than they had at that point.
“It’s gruelling,” Dalziel said of the routine. “It’s non-stop meetings, networking and pitch events. The biggest challenge during that whole process is that you’re not actually working on your business, working on developing your product or selling your product.”
See:
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Equity Crowdfunding: Five Strategies Guusto Used to Become Canada’s First
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Startups navigate regulatory patchwork amid new equity crowdfunding rules
Their search for financing, however, coincided with the approval of rules by the B.C. Securities Commission that allow companies to raise private capital using the techniques of crowdfunding.
Online crowdfunding, through websites such as Kickstarter, Indiegogo and FundRazr, has been used to launch hundreds of businesses by giving them a venue to preview ideas and pre-sell products to enthusiastic early adopters.
Unlike Kickstarter though, where donors put up money to get tickets to a performance or early access to the beta version of a hot new product, equity investors buy shares in the startup they’re backing with the possibility of a return if the company takes off. Thus the name, equity crowdfunding.
No one is expecting equity to replace the so-called donations and rewards side of crowdfunding as a tool for businesses. It is more of an evolution in the overall sector that will see the two sides filling different niches.
Equity crowdfunding is viewed as putting a smaller-scale form of venture capital into reach for a class of investors who don’t qualify as accredited investors.
However, investor-protection advocates are wary of combining the hype associated with crowdfunding campaigns with the arena of startup ventures.
“There’s definitely a risk for investors in that they can’t get rid of the shares, they’re not liquid,” Dalziel said. “You can’t go to a stock exchange and trade them.”
Dalziel and Facciolo turned to FrontFundr, one of the first online portals to take on equity crowdfunding in Canada. They ran a campaign under the new rules to raise a portion of what turned into close to $50,000 in private financing.
For Guusto, Dalziel said their investors were largely already customers of their app and web-based gifting platform, and are savvy enough to know they’re hedging that the money they’ve put in will help its creators increase the business’s value for an eventual payoff.
“The two options they have would be the company grows to the point we could pay a dividend — likely three, four, five years down the road,” Dalziel said. “Or a potential exit where the company is acquired or (launches an initial public offering) onto a public market.”
However, for the amount Guusto was able to raise, Dalziel said the crowdfunding has proved to be an effective tool, and not just for the cash they raised. “The biggest benefit was having brought in — I think we’re at 35 investors in the business now — a group of real brand champions, a group of people supporting Guusto and helping us get the message out,” Dalziel said.
Early days
It is still early days for equity crowdfunding in Canada, which has only been allowed in B.C. since the middle of last year. Alberta, Saskatchewan, Ontario, Quebec and Nova Scotia are also on board.
Generally, equity crowdfunding rules restrict the amounts companies are allowed to raise in a single financing and the maximum amount individual investors can sink into a single financing. In B.C. the limits are $250,000 per financing and $1,500 per individual investor.
Companies are also required to raise funds through specific online portals, which must post information about the companies trying to raise money, such as offering documents that generally spell out a description of the businesses, what they are selling and other sources of money.
The incipient equity side of crowdfunding only accounts for about $5 million to $10 million of that $150-million overall national estimate for crowdfunding of all types, said Craig Asano, chairman of the National Crowdfunding Association.
The NCFA counts 15 equity crowdfunding portals among the 110 crowdfunding entities across Canada, with five of those in B.C.
The equity side of crowdfunding is more established in the U.S. and Europe. It represents the evolution of the private-investment sector to an online presence, said FrontFundr CEO Peter-Paul Van Hoeken.
Van Hoeken was already setting up a brokerage to sell exempt-market, private-company investments online under the existing rules for other investors when the BCSC issued its rules for crowdfunding, which dovetailed with his own efforts.
He looks at it as an avenue for companies that have advanced beyond the idea stage and have built a product and started to do some business, but have exhausted other early stage sources of capital such as family and friends.
And it gives the company’s early customers a chance between throwing money into a company to buy something, “or becoming a co-owner, even a small part.”
Critics wary of selling hype over risk
However, the investor-protection advocate organization Fair Canada (the Canadian Foundation for the Advancement of Investor Rights), remains skeptical about mixing online promotion of startup companies with a pool of unsophisticated investors without a high level of financial literacy.
“We didn’t feel what Canadians were clamouring for and really needed was more opportunities to sink money into extremely high-risk, low-probability investments,” Fair executive director Neil Gross said.
Gross said most people struggle to save $1,500 or $2,500 to put into long-term investments such as RRSPs and the fear is too many of those people won’t distinguish the difference between that and backing a high-risk startup venture, which he characterized as “slightly regulated lottery tickets.”
Too many people might be captivated by tech-sector success stories and believe they have a chance to buy into the next Hootsuite or Shopify, Gross said, and not fully comprehend that they’re buying into things they can’t sell.
[Podcast]: What You Need to Know About Crowdfunding Right Now
Gross said crowdfunding is being introduced at the same time securities commissions have loosened regulations for raising private capital without having to register publicly, which also increase risks for investors.
“What regulators have done is set a buffet of risky propositions out and made it easier to market (them) to a broader spectrum of Canadians,” Gross said.
To date B.C. hasn’t seen a lot of uptake for equity crowdfunding, said Peter Brady, director of enforcement for the BCSC.
Guusto is the first company to use the method, but only relied on the crowdfunding rules to raise about $6,000 of its financing, Brady said. The rest came from other private sources such as accredited investors.
Brady said companies raising money through the crowdfunding rules need to file reports with the commission detailing how much money they raised and how many shares were sold, just like all other companies raising private capital.
Exempt-market investments have been a problem for the BCSC in the past with high-profile frauds such as the $65-million David Michaels case, which saw the unregistered salesman sell exempt-market private shares to seniors in money-losing firms.
To date, Brady said he hasn’t heard of anyone abusing the equity crowdfunding rules, but the companies using them will be subject to the same surveillance by BCSC enforcement staff as all other companies.
Van Hoeken said there is an onus on portals, such as FrontFundr, to do a credible job of vetting the companies that make offerings through their venue and make sure investors understand the high-risk nature of the investments.
“We perform our own due diligence,” he said, in terms of establishing what companies plan to do with the money they raise and who is involved, “and if we’re not comfortable, we won’t take them on.”
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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.
[Podcast]: What You Need to Know About Crowdfunding Right Now
Profit Guide Business Cast | Robert Gold | March 31, 2016
Insights and best practices from the entrepreneurs and experts at the 2016 Canadian Crowdfunding Summit
Once a niche funding source for personal projects and products no consumer would ever want to buy, crowdfunding has evolved into a legitimate, common form of capital for startups and innovative businesses.
Want proof? Look no further than the agenda of the second annual Canadian Crowdfunding Summit, held at the MaRS Discovery District on March 3, 2016. Panelists and speakers at the event, hosted by the National Crowdfunding Association of Canada (NCFA), included a who’s-who of Canadian and international entrepreneurs and experts. And Ontario Finance Minister Charles Sousa was on hand to open the conference (see Opening Speech).
“The future of crowdfunding is now,” believes NCFA Executive Director Craig Asano. Here are eight ways to take advantage of crowdfunding, courtesy of the entrepreneurs and experts who spoke at the Summit:
1. You need to do your homework
Raising capital from the crowd seems like a relatively straightforward process: shoot a video and start a campaign on Kickstarter or another platform, then sit back and watch the money roll in. If only it were that simple.
Before the Revol Technologies team put their custom-fit earphones on Indiegogo, they studied past successful crowdfunding campaigns. “I reached out to as many people who have done campaigns in the past [as possible] to get valuable information on the do’s and don’ts of their campaigns,” explains Dan Blumer, the co-founder and CEO of Montreal-based Revol. “So essentially taking the templates of others and doing them ourselves.”
It paid off, big time. Revol’s original goal was U.S.$100,000, but the campaign ended up raising U.S.$2,570,000, and the company has since made an additional six figures in pre-sales on Indiegogo.
2. You need to educate your angels
New regulations around equity crowdfunding allow companies in most parts of the country to tap retail investors for capital. But simply building the largest pool of civilian backers you can won’t lead to the best results. “It’s not sufficient to assume that just because they’re rich they’re necessarily going to be able to add value to the shareholders agreement [or] understand the down rounds [or] how to value a business notes Bill Morrow, CEO of Angels Den Funding Inc, a British platform founded in 2007.
The U.K. has had equity crowdfunding for several years now, and Morrow’s opening keynote at the Summit detailed what it takes for a country to make the financing model successful. “For Canada to actually be able to progress, you kind of need to have an education program for both entrepreneurs—Canada’s really good at that—but for the angels as well,” he told me.
For example, retail investors may not be familiar with the risk-reward calculations in niche or specialized industries. “The challenge for us is that as a research and development-oriented enterprise, the message can be complicated,” admits Buck Young, the co-founder and Operations Manager of CannTx Life Sciences, a medical marijuana company. “Our challenge will be to really simplify that and condense it.”
See:
3. The fundamentals still matter
His main business is software, but Michael Hyatt also has a side-gig investing in startups as a Dragon on Next Gen Den, the online spinoff of the hit CBC entrepreneur pitch show. Hyatt says the same rules of success apply today as a decade or a century ago. “Great businesses show great value to clients and are something they really, really need,” he says.
One particularly important skill for entrepreneurs: the ability to pivot. “Do I like their market and do I think they can make it?” Hyatt says he asks when evaluating an investment opportunity. “And do I think they can pivot when one of the founders leaves or they lose funding or something else happens? Because inevitably it does.”
The same rules apply to investors looking to back a company through a crowdfunding platform, or to founders seeking capital via one.
4. You need to deliver
Plenty of companies have raised six or seven figures through crowdfunding campaigns, and then failed to meet their targets or deliver their products on schedule. Equity adds a whole different set of pressures to the mix, because those disappointed backers are now shareholders.
“I see a lot of companies raise millions of dollars for a really great product, [but] there’s a big difference between raising that money and then shipping that product and then getting acceptance,” says Hyatt.
Putting in the early work pays off. “The most successful campaigns are the ones that take the time to plan, [to] understand their consumer and the market and the community they’re trying to build, and then execute that plan,” says Daryl Hatton, founder and CEO of Vancouver-based crowdfunding platform FundRazr. “Otherwise they tend to fail rather quickly and rather embarrassingly.”
5. It’s not just for startups
While much of the conversation this year has been about the new equity crowdfunding regime, other forms of the financing model can and do exist. There is of course the original kind, where campaign backers on platforms like Kickstarter or FundRazr receive rewards in the form of experiences or physical goods in exchange for their money. But crowdfunding is also being applied to asset classes like debt and real estate.
The last of those categories has seen a particular proliferation of platforms and interest. “The predictability of cash flows, the ease of understanding and analyzing rent rolls, cash flows, [and] financial statements [make real estate] a lot more predictable compared to the other asset classes,” says Amar Nijjar, the founder and CEO of Tornto’s R2 Crowd.
Continue to Listen to the Podcast --> Now
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.
Business schools play catch-up on crowdfunding
The Globe and Mail | DAINA LAWRENCE | March 22, 2016
Several years ago, Simon Parker, a professor of entrepreneurship at Ivey Business School, integrated crowdfunding into his curriculum as he recognized the need to impart this skill to the next generation of business leaders.
But it hasn’t been easy.
“I don’t think that Canadian universities or business schools are doing a particularly good job at covering crowdfunding,” Dr. Parker says, “but then again I don’t think the Canadian government is doing a very good job, either.”
Despite crowdfunding being the new normal in business, there is still the struggle to teach this subject because of its regulatory hang-ups in Canada. The challenges lie with the complexity of the crowdfunding environment in Canada – in particular, equity crowdfunding (when a group of people invests funds in an unlisted company in exchange for shares in that company), which is provincially regulated – unlike in the United States where it is under federal jurisdiction.
According to the National Crowdfunding Association of Canada, there are 72 crowdfunding platforms online throughout the country, including 12 for equity crowdfunding.
In January, the securities regulatory authorities in Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia adopted a regulation that will provide a regulatory framework for crowdfunding platforms and allow businesses that use them greater access to capital in these five provinces. But until now, this has not existed and some feel this is just the first step to get Canada on pace with the rest of the globe.
“The provinces have a responsibility for the national regulation,” explains Dr. Parker. “Some of them are working toward developing rules for crowdfunding sites. So there are crowdfunding sites in Canada, but at the moment there is still some uncertainty about equity crowdfunding.” See recent regulatory developments in equity crowdfunding in Canada
It’s this uncertainty that Dr. Parker and his colleagues find perplexing when it comes to their teachings. On the one hand, crowdfunding is part of the entrepreneurial landscape around the world. On the other, it’s still a regulatory minefield in Canada.
So is it worth teaching?
See:
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Crowdfunding Is Catching On At Schools Desperate For Cash
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2016 Canadian Crowdfunding Directory (94 portals, 26 providers)
Elspeth Murray, professor of strategy and new ventures at Queen’s University’s Smith School of Business in Kingston, insists that lessons on crowdfunding are indispensable to future business leaders as it’s now a well-established part of not only the entrepreneurial world, but also the economy as a whole.
“This is a brand new, never-been-seen-before way of participating in the entrepreneurial economy,” she explains.
“It’s the sharing economy,” adds Dr. Murray. “It’s a whole bunch of things that kind of coalesce to make this a really important topic because it’s here to stay. So if you’re a business student, you need to understand this.”
But she also acknowledges that her teachings include many cautionary tales to students who might be considering crowdfunding as a way to generate startup capital for their business venture.
“We very much talk about the [provincial] regulatory environment as a barrier,” says Dr. Murray. “There have been massive lobby groups attempting to get the regulations changed because our entrepreneurs are disadvantaged, and the average citizen is ticked [off] because of our limited ways of participating in helping new ventures.”
From almost the first day of class, the topic of crowdfunding is incorporated into Mia Maki’s entrepreneurship course at the University of Victoria’s Gustavson School of Business.
“I think it has to be talked about because it’s part of the ever-changing landscape of financing available for entrepreneurs,” she explains.
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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.
Disruption and Conversations Took Over at the NCFA Conference in Toronto
HuffPost Business | Ian Khan | March 16, 2016
The National Crowdfunding Association of Canada Conference a few weeks ago in Toronto was a hit. I met with Crowdfunding fanatics, experts and people who are a big part of the industry. Overall, a very well put together event, the biggest takeaway was the quality of sessions and conversations. From Venture funds to Angels to Crowdfunding platforms, the conference was definitely a highlight of the Canadian Crowdfunding Industry in 2016.
I met with a number of people at the event and has the pleasure of having in depth conversations with three disruptors in the industry. I first spoke with Arti Modi, CEO and Co-Founder of LendingArch, a Calgary based financing platform. Arti share some key insights about how the industry is being affected by Millennials as an example and what their company is doing differently that taps into an under served market. More details on LendingArch at www.lendingarch.com
I also spoke with Founders of Canada’s Only Luxury Electric Sports Vehicle, a huge disruptor that is taking the route of Equity Crowdfunding to raise over $25 Million. Both Mike and Mario shared their insights into the automobile industry with a touch on technology and crowdfunding and why their choices of taking the equity crowdfunding route was the best decision they could make. More details on this revolutionary global phenomenon with its home right here in Canada at www.dubucmotors.com
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Listen to the podcast here: Online through the Web | On iTunes
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Also: Event Wrap-up: 2nd Annual 2016 Canadian Crowdfunding Summit on March 3 (Toronto)
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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.
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.
View:
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Recent Regulatory Developments in Equity Crowdfunding in Canada
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Full Speaker Lineup and Program for 2016 Canadian Crowdfunding Summit Announced (March 3 in Toronto)
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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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.
