The Province by Peter Henderson | November 13, 2015

When long-time ad agency executive Jillian Bowman needed capital to start a small business, she didn't find an angel investor — she found a crowd.

Inspired by the challenge of packing lunches for her four kids, Bowman used equity crowdfunding platform SeedUp to raise $50,000 by selling an equity in Epicured Market, an online grocery and meal-planning service for Canadians with dietary restrictions.

Bowman said the crowdfunding process was more flexible than a bank loan. She said it allowed her to raise smaller amounts while giving her the option of returning to investors if she wants more.

Raising money from people she didn't know was also a testament to their belief in her idea, she said.

Related: 6 Ways to Use Crowdfunding for Product Development

"It made more sense for the business," she said. "It gave me the confidence that this business is going to work."

Epicured Market has just entered the pilot phase with a small number of families.

While some early-stage entrepreneurs take out consumer loans or run up their credit cards to support their initial expansion, Bowman said she couldn't afford that option with one of her children in university and another enrolling next year.

Bowman is one of a growing number of entrepreneurs using equity crowdfunding to jump-start their work, and five provinces have just made it easier for the average Joe or Jane to buy equity in a business.

Unlike websites such as Kickstarter, Indiegogo and Patreon, Bowman's backers get a stake in her business.

Last week, Ontario said it would join five other provinces in a co-ordinated effort to loosen the rules for companies looking to raise money through online crowdfunding platforms and open up equity crowdfunding to all investors, with limits based on net worth.

View: 

• Regulators including OSC Publish Crowdfunding Exemption and Registration Framework for Funding Portals

• ASC and Nunavut Securities Office Publish Proposed Start-up Business Exemption for Comment

• New “Start-up” Crowdfunding Exemptions Adopted in Some Canadian Jurisdictions

Saskatchewan, Manitoba, Quebec, New Brunswick and Nova Scotia have also implemented that policy.

Craig Asano, founder of the National Crowdfunding Association of Canada, said the new policy could help the many Canadian companies that fail at an early stage because of a lack of financing.

"This is about strengthening the feeder systems of small businesses and the culture of entrepreneurship in Canada, which is linked to our innovation economy," he said.

While the sums involved are still small, he said, equity crowdfunding is poised to grow exponentially. First-time investors can also use it as a way to get their feet wet, he added, making it attractive to millennials looking for more control and connection to their portfolio.

Related: SeedUps Canada is Self-Crowdfunding as Market Heats Up Around the World

Sandi Gilbert, founder and CEO of SeedUp, said equity crowdfunding is a more efficient way of matching investors with companies looking for support.

"Companies can present their deal and get broad exposure to investors that have never been able to invest in those deals before because they weren't sitting in the boardroom when the company was pitching itself," she said.

Gilbert said crowdfunding is best suited for companies that are beyond the idea stage but far from going public, and that it can serve as a bridge while entrepreneurs seek to tap the deeper pockets of professional investors.

"This is really about companies that have a good business plan and have good traction and need to take their company to the next level and can't find that next million," she said.

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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.