Online Funding / Investing Portals | National Crowdfunding & Fintech Association of Canada

Cash-strapped B.C. startups begin tapping equity crowdfunding

Business in Vancouver | Tyler Orton | Oct 5, 2015

Securities exemptions allow small companies to issue shares without filing a prospectus

Peter-Paul Van Hoeken uses words like “diverse” and “colourful” when describing Canada’s system of securities regulations.

Instead of one agency overseeing the rules managing the buying and selling of shares, the country has a patchwork of regulators operating in different provinces.

So when the Dutch expatriate began working on a platform that would allow startups to raise money through crowdfunding, he spent two years figuring out how to fall in line with all of Canada’s different rules.

“Everybody at that time was in the dark about the whole crowdfunding thing, including the regulators,” said Van Hoeken, the founder and CEO of fundraising portal FrontFundr.

But in mid-September the Vancouver-based company facilitated B.C.’s first round of equity fundraising for a startup after regulators introduced new rules earlier this year.

While traditional crowdfunding involves soliciting donations to raise money for projects like films or devices, equity crowdfunding involves startups selling its shares directly to investors. Up until May, only traders regulated by the BC Securities Commission (BCSC) were allowed to sell shares. But new exemptions adopted by B.C., Saskatchewan, Manitoba, Quebec, New Brunswick and Nova Scotia now allow companies to sell shares through an approved funding portal such as FrontFundr.

“When the rule came out in May, that was two weeks prior to our launch,” Van Hoeken said. “It was almost like impeccable timing.”

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FrontFundr had been working to fall within all the existing regulations until it found itself in a position where many of the roadblocks were removed in six provinces.

Guusto, the first B.C. startup to benefit from equity crowdfunding, raised $44,000 in its first at-bat.

Co-founder Joe Facciolo said that, considering how difficult it is for some companies to raise money outside major tech centres like San Francisco or financial hubs like Toronto, the payoff potential for startups is considerable.

“The pool of resources in Canada from angel investors is pretty limited, so we believe this mechanism helps to deepen this pool.”

Facciolo added that he’s planning another round of equity crowdfunding soon.

But there are limits as far as what startups can raise through the new equity crowdfunding rules.

No single campaign is permitted to raise more than $250,000, and individual investors are capped at making $1,500 investments, according to BCSC rules. Startups can complete only two crowdfunding distributions a year, and those campaigns can’t run simultaneously.

The issuer has to prepare an offering document, but the startup is exempt from issuing a prospectus. Such a document provides investors with financial statements and detailed information about a company to give investors a strong understanding of what they’re putting their money into.

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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 1100+ 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.

September 21, 2015 Entrepreneurs, Start-ups, Small Businesses, Equity Crowdfunding, Alternative Funding, Fundraising, Investing, Trading, Online Funding / Investing Campaigns, Online Funding / Investing Portals No comments

Vancouver’s Guusto first Canadian company to close round of equity crowdfunding

Business in Vancouver | By Tyler Orton | Sep 18, 2015

While crowdfunding campaigns have gained attention for raising millions for films, video games and even potato salads, they’ve all be predicated on donations.

But on Friday (September 18), Vancouver-based startup Guusto became the first Canadian company to close a round of financing through equity crowdfunding.

The company wasn’t looking for donations but instead raised about $44,000 by selling shares.

Guusto has developed an app allowing people to gift restaurant food and drinks to others and co-founder Joe Facciolo said he saw equity crowdfunding as an opportunity to take investment from customers — people who were already loyal to the brand and believed in what they were doing.

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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 1100+ 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.

September 16, 2015 Fintech International, Fundraising, Investing, Trading, Online Funding / Investing Portals No comments

Fundrise Goes Global: Australia, UK, Canada Now May Invest

Crowdfund Insider by JD Alois | September 16, 2015

Real estate crowdfunding platform Fundrise is going global. While not surprising, Fundrise has taken a dramatic step in leveraging existing technology and investment opportunity to provide investor access in Australia, Canada and the United Kingdom. Fundrise is one of the leading online real estate marketplaces and a recognized trailblazer in the investment crowdfunding arena. Earlier this year Fundrise co-founder and CEO Ben Miller made an expedition to China in an apparent reconnaissance of the market there for possible growth. It appears now that English speaking countries are an easier target but may be a precursor for Asian expansion.

Related: Property Crowdfunding Comes to Canada With Toronto Mall Project

Dan Miller, co-founder of Fundrise stated since their launch they have received thousands of requests from international investors seeking the relatively safe harbor of US real estate. Today they have opened up their platform to three more countries;

“Until now, there has been a lack of investment opportunities for savvy investors who understand the yield and risk mitigation that investing in U.S. real estate can bring,” said Dan.

Brother Ben described the strategic growth as “an overall benefit to all of their users”. They will now be able to attract larger, international investment opportunities;

“Adding international investors increases the depth of our capital base, which in turn increases the volume, consistency, and quality of investments that we are able to produce.”

This past July, Ben made the announcement they expected a record-breaking fall. The global push should fuel platform growth as multi-national investors may now register and invest.

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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 1100+ 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.

September 11, 2015 Fundraising, Investing, Trading, Online Funding / Investing Portals, P2P, Lending, Digital Bonds, BNPL, Private Credit No comments

Startup bringing peer-to-peer lending to Canada this fall

The Globe and Mail | CLARE O’HARA | Sep 11, 2015

Canada’s first peer-to-peer lending platform is set to launch this fall allowing Canadian investors the opportunity to fund small local business ventures.

Peer-to-peer lending has been a controversial issue within the Canadian marketplace, with many providers opening their platforms only to institutional and accredited investors. (An accredited investor generally has to have minimum individual income of $250,000.)

But a new online lender – Lending Loop – will open its doors to allow Canadian investors with as little as $50 to participate in its online lending platform.

Lending Loop allows small businesses to apply online for business loans up to $500,000. Once approved, businesses are added to an online marketplace where individual investors can peruse the online shelves for investing opportunities.

Before handing over any cash, investors are able to see a company bio, the amount of the loan requested by the business, the reason for the loan and the amount of interest the business will be paying to acquire the loan. Putting all your eggs into one basket is frowned upon by the online provider and investors are encouraged to spread their investment across multiple businesses to diversify risk.

“The more businesses you lend to, the more you are spreading your risk and the greater chance you have of earning a positive return,” says Cato Pastoll, chief executive officer of Lending Loop. “In terms of investor education, we prioritize in advising investors about the role of diversification on our platform.”

The big incentive for investors will be the potential for robust returns – which will be 1.5 per cent less than the borrowing rate (which varies between 6 per cent to 15.5 per cent). There is no maximum amount an investor can loan, although individual investors are not permitted to fund an entire loan for one business to lessen the degree of risk involved. Investors will contribute along with other investors to make up the total amount a small business is requesting.

For investors forking over the cash it can be a risky investment product. The loans can take anywhere from six months to five years to repay. Investors receive monthly blended interest and principal payments. If a business ends up defaulting on the loan there is no guarantee on your principal amount.

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For that reason, Lending Loop tries to determine the creditworthiness of the business before approving them as a borrower. Businesses must be operating for at least two years and currently have greater than $200,000 in annual revenue.

In the United States and the United Kingdom, peer-to-peer lending has been operating for almost a decade with online providers matching up individuals looking to borrow money with individuals looking to loan the money for an attractive return.

Despite being robust in other countries, peer-to-peer lending has proved to be a murky situation for Canadian investors. Unlike in some countries, peer-to-peer lending in Canada does not have a legal framework adapted to its specific characteristics. As loans are interpreted as “securities,” peer-to-peer lending is regulated by the Securities Act of each province or territory.

Last June, the Ontario Securities Commission put out a notice stating that providers in the peer-to-peer lending market may be subject to regulation and could even be required to register as investment dealers.

The OSC said the emerging companies appear to have different structures and they may be subject to regulation, depending on how loans are provided and whether the loan products constitute a “security” under Ontario legislation.

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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 1100+ 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.

September 10, 2015 Equity Crowdfunding, Alternative Funding, Fundraising, Investing, Trading, Online Funding / Investing Portals No comments

InvestX Capital Makes Its Second Round Financing Available to Regular Investors

InvestX Press Release | September 10, 2015

Vancouver, BC and Dallas, TX – September 10, 2015: InvestX Capital Ltd., developers of the first online cross border platform that give investors access to retail size allotments of private equity and venture capital backed companies alongside institutional investors, announced today that it has opened up its second round financing on the Waverley – Powered by InvestX platform to raise US$1.5 million.

“Financial platforms are disrupting the financial services and wealth management industries”, stated Marcus New, CEO of InvestX. “Early innovators who have become marketplace leaders like Lending Club, Prosper, Realty Mogul, and Wealthfront have all been funded by institutional investors even though their platforms have democratized access for retail investors.” Mr. New continued “After raising our first round with institutional investors we wanted to be true to the principles and values of our community and give access to the same retail investors who have helped to make us a success.”

Since its launch in March 2014, InvestX has been working diligently to break Wall Street’s lock on the number one returning asset class - private equity and late stage venture capital. PE and VC has historically been an institutional product with multi-million dollar minimum investment amounts, 10 year terms and a callable capital model which has locked retail investors out. InvestX founders building on their success in building stockhouse.com that helped to democratize the public equity markets, launched InvestX to give all investors the ability to own this asset class in their portfolios.

To date, InvestX has given investors the opportunity to access some of the highest-profile, fastest growing global technology companies like Lyft Inc. and Spotify Inc. The second round of financing will be used to continue to grow the community of investors and the number of issuers available.

New said he is truly excited about this financing round. “Having members and retail investors as co-owners of the InvestX platform and product strategy is a true testament to the great strides we have made to date in advocating for retail investors as we work hard to unlock this number 1 returning asset class for everyone not just Wall Street players.”

For full details on the InvestX Capital Offering please visit the company’s website at www.investx.com or call 1-844-246-4556.

Media Contact:

Judy-Ann Pottinger

778-383-1600

judyann.pottinger@investx.com

ABOUT INVESTX

InvestX is the developer of the first-of-its-kind online platform operating to provide investors’ access to private equity and venture capital backed companies alongside established high quality professional private equity firms typically only available to the ultra-high net worth individuals and institutions.

See Marcus New speak at VanFUNDING 2015 (more info...)

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 1100+ 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.

September 8, 2015 Equity Crowdfunding, Alternative Funding, Fundraising, Investing, Trading, Online Funding / Investing Portals No comments

Property Crowdfunding Comes to Canada With Toronto Mall Project

Bloomberg | Katia Dmitrieva | Sep 8, 2015

A shopping mall in northern Toronto is set to be among the first Canadian real estate projects to be financed partly through crowdfunding.

NexusCrowd Inc. is opening its online platform tomorrow to accredited investors who want to contribute a minimum of C$10,000 ($7,520) for a stake in the property. The company says it’s the first in Canada to partner with institutions at the real estate development stage to use crowdfunding, an investing model that has become popular in the U.S. in recent years and is growing worldwide.

Accredited investors in Canada haven’t had access to the equity portion of development projects, Hitesh Rathod, NexusCrowd’s chief executive officer, said in a telephone interview from Toronto.

NexusCrowd to open platform with minimum C$10,000 investment
Development to be among first in the country to use model

"There’s going to be a tremendous amount of demand for that type of project," he said.

Canadians are gaining access to such investments after crowdfunding for small startups was approved in May by financial-services regulators in six provinces. The Ontario Securities Commission is developing its own set of standards, due later this year.

Partner Projects

NexusCrowd targets projects that are at least 50 percent funded by a partner already. For any investment, it aims to raise a minimum C$500,000 in equity from crowdfunding, and is targeting returns of 15 to 25 percent annually.

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The offerings are limited to accredited investors, which requires an individual to have annual income of at least C$200,000 in the past two years and own financial assets worth at least C$1 million or net assets totaling at least C$5 million.

The initial property is a two-story, 238,000-square-foot (23,000-square-meter) mall that will be anchored by Korean grocery store Galleria Supermarket, which also has a 50 percent stake in the development. The remaining interest is owned by closely held TerraCap Management.

NexusCrowd partnered with TerraCap with the goal of raising about C$500,000 in equity from crowdfunding. That comprises 2.5 percent of the project’s total equity portion and 0.5 percent of the project’s C$100 million size. The development is scheduled to be completed by December 2017.

Rathod, 34, and Aris Economopoulos, the company’s vice president of operations, both previously worked at investment firm Mackie Research Capital Corp. Rathod also was an investment banker at Canaccord Genuity Group Inc., focusing on real estate.

Rathod said the business idea came to him about two years ago, as he saw developers that were seeking as much as C$20 million in equity had a tough time finding established investors.

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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 1100+ 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.

August 28, 2015 Entrepreneurs, Start-ups, Small Businesses, Fintech International, Fintech Services, Innovation and Resources, Online Funding / Investing Portals No comments

Why This $9 Billion Publicly Traded Toy Company Is Crowdfunding to Find the Next Big Game

Forbes | Catherine Clifford | Aug 28, 2015

Crowdfunding is how indie bands and other under-the-radar creative types raise money to record their next album, produce their next short documentary or put up their newest art show. It’s hip, it’s democratic, it’s trendy, it’s part of the everyday vernacular of millennials.

It’s also finding favor within the corporate board rooms of giant, public companies.

Hasbro is one of them. The toy titan has more than 5,000 employees around the world and annual revenues north of $4 billion. Founded in 1923 and publicly traded since 1968, it’s the company behind Mr. Potato Head, My Little Pony and Transformers. Today, it’s turning to the 15 million monthly users on crowdfunding platform Indiegogo to help it find its next home-run game idea.

To be sure, crowdfunding is not about the money for Hasbro, which is a $9 billion company. “For us, it is building that relationship directly with the creators and makers,” says Brian Chapman, the company’s head of global design and development. Soliciting ideas from the public through crowdfunding is Hasbro “reading the pulse of the gamers,” getting a sense of the popular ideas and trends in the community, he says.

Hasbro and Indiegogo will be accepting applications to compete in the challenge through Sept. 30. The idea is to create a party game -- one that encourages face-to-face, real-life interaction -- not a game played on one’s phone.

See: Why Crowdfunding Is a Must-Have Marketing Tool for Brands

A team of internal designers and game developers at Hasbro will pick their five favorite submissions. Those five game ideas will run crowdfunding campaigns on Indiegogo from Oct. 30 through Dec. 1 to raise money and generate user feedback. Hasbro will pick a winner, taking into consideration how many backers each contestant attracted with their campaign. The winner will get $10,000 on top of what they already raised and a trip to Hasbro headquarters in Pawtucket, R.I., for a chance to meet with all the game-making-pros and get advice on everything from manufacturing viability to marketing strategy.

For Indiegogo, working with a big company like Hasbro brings new eyeballs to the platform. The San Francisco-based platform has recently devoted more time and resources to what it calls the “Fortune 500 Projects,” including putting together a small, internal team devoted to these sorts of brand partnerships. Running brand partnerships presents a new revenue stream for Indiegogo, as the platform charges big companies a higher rate than the typical 5 percent commission on funds raised.

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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 1100+ 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.