Global fintech and funding innovation ecosystem

Crowdfunding: enabling global entrepreneurship, the future of Canada’s innovation economy

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NCFA Canada | Oct 28, 2015

Open letter to PM designate Trudeau - Crowdfunding:  enabling global entrepreneurship, the future of Canada's innovation economy

Dear Prime Minister-Designate Trudeau,

On behalf of the National Crowdfunding Association of Canada (NCFA), I would like to extend our congratulations on your victory in last week’s federal election. We believe that your new government has provided Canada with the opportunity to effect real change in public policy, including as it involves crowdfunding.

Crowdfunding is about harnessing the power of the internet to unlock transparent and cost effective sources of capital for early-stage companies and projects from a wide range of stakeholders. Online financing is an innovative approach that brings together investors, entrepreneurs and borrowers in a way that simply didn’t exist ten years ago.

In 2014, global crowdfunding funding volumes grew to $16.2 billion across all crowdfunding models (eg., equity, debt/loans, reward/product and donation) according to a leading industry report (with 2015 predictions approaching $35 billion). The World Bank forecasts that the crowdfunding industry will represent a $96 billion industry annually by 2025, and the World Economic Forum has included crowdfunding as one of the 6 major disrupters of the future of financial services.

In Canada, we can quote one of Canada’s first and largest crowdfunding marketplaces, “35% of the listed companies are from the technology sector and more than 20% of the ventures listed are owned and/or operated by female entrepreneurs. Alternative financing is helping bridge the gender gap and directly accelerating the growth of early stage ventures. With over $20 million raised in 2014 and an expected $100 million to be raised by the end of this year, clearly crowdfunding is helping entrepreneurs acquire the necessary funds to jump start their business, while also boosting the Canadian economy which in turn will generate countless jobs."

Back in March 2013, NCFA recommended a set of principles to guide the implementation of emerging equity crowdfunding regulations including developing a robust, transparent and inclusive set of rules to maximize opportunity for all involved without missteps.

To nurture development and help these complex alternative finance and hyper markets grow proportionately to the opportunity at hand amidst increasing pressures from global competition, we offer the following principles to help guide policy makers in the near term to avoid any lost opportunities.

1. Canada needs to commit to not falling behind other leading countries

The absence of a national securities regulator in Canada makes it difficult to comply with a ‘patchwork’ of regulations across 10 provinces and 3 territories.

If friction points are too great and impassable, the ability for new entrants to emerge becomes impractical. So, we would encourage your government to move quickly with the Canadian Cooperative Markets Regulatory Authority and work to bring the remaining provinces onside as participants.

Regulations that were designed in the 19th century and implemented in the 20th century need to be updated to reflect conditions in the 21st century. Let’s ensure Canada has an internationally competitive regime that is developed for current times and revisit outdated restrictions, such as qualifying CCPC (Canadian Controlled Private Corporations) must have less than 50 investors.

Not falling behind also means increasing the amount of support for and access to early stage capital such as the amounts that crowdfunded ventures can raise from investors and the amounts that investors can put into crowdfunded projects and companies. In the UK, the British government garnered a tremendously positive public sentiment and greatly helped spur the growth of small business by investing £40 million in debt-based crowdfunding and implementing mandatory referral programs in the ecosystem.

Canada aspires to diversify our economy from dependence on natural resources and to create world class new economy businesses.  Our early stage funding ecosystem is sorely lacking in capital.

2. There needs to be a level playing field for all who provide early-stage capital

A level playing field means that the newly-emergent P2P business marketplace and consumer lenders are not disadvantaged relative to traditional lenders and that the tax system is structured as to provide equivalent levels of support to all who participate in the innovation economy.

We note for instance that investors in British Columbia have employed the Venture Capital Tax Credit with great success and your party has committed to restoring a retail investor tax credit mechanism that had been jettisoned by your predecessor. Early stage tax incentive programs will help de-risk qualifying investments while also improving market confidence.

In the same vein, it is likely appropriate to carefully re-balance the entire tax treatments for those involved in nurturing innovation. Ultimately, this means revisiting Canada’s treatment of capital gains, stock options and the SR&ED program.

3. Canada needs a robust crowdfunding education and literacy program and industry metrics and benchmarks

As an educator yourself, you are keenly aware of the value of continuous learning. In our opinion, to maximize the opportunity for democratizing finance, many more people in this country will need to be educated about the opportunities that crowdfunding offers for early stage-capital raising, such as the ability to tap into global markets and resources that will help small businesses achieve international scale and commercialization of their venture.

Building on our expertise, the government of Canada should partner with the NCFA to deliver these programs from sea to sea. Invest in a national crowdfunding literacy program based on data-driven research and best practices so that all involved, from investors to issuers, can confidently use these new and exciting financing tools.

4. There needs to be a Royal Commission on the Innovation Economy

Ultimately, it is time for a wholesale review of how Canada can better stimulate the innovation economy and improve the rate of commercialization of new discoveries in high-tech, scientific, medical and environmental fields.

Our recommendation is that you speedily name a Royal Commission on the Innovative Economy. This Royal Commission, modeled after the former Macdonald commission of three decades ago, would be composed of eminent persons with the mandate to consult Canadians who would report back to you within twelve months with a set of recommendations for energizing the new economy.

This new Royal Commission could be directed to finding the best ways of unblocking the bottlenecks that are now choking our collective ability to best deploy the ideas, energies and entrepreneurs now emerging from our institutes of higher learning.

We welcome the opportunity to collaborate. The time to act is now.

Yours sincerely,

NCFA Canada


Note to readers: This post is written on behalf of the NCFA Canada, its members, and affiliates. Special thanks to the following participating members for their valuable contributions in our collective effort to develop Canada into a world class alternative finance crowdfunding centre:  Andrew Graham (Borrowell), Cato Pastoll (Lending Loop), Craig Asano (NCFA), Daryl Hatton (FundRazr), Diana Yazidjian (DFY Consulting), Gil Michel Garcia (Financement Participatif en Capital Québec), Jaimy Warner (Raindance), Marcus New (InvestX), Matthew McGrath (The OCMX), Peter-Paul Van Hoeken (FrontFundr), Richard Remillard (Remillard Consulting Group), Rubsun Ho (Crowdmatrix inc.), Sandi Gilbert (SeedUps Canada), Sean Ballard (ATB Financial), Sunny Shao (NCFA) and Tim McKillican (Open Avenue)


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The National Crowdfunding Association of Canada is the leading and only nationally organized non-profit working with over 1300 social and investment stakeholders across the country, and the national voice of an industry that is fast becoming an integral part of the start-up financing ecosystem. Learn more About Us or visit

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