At this point, I’m sure everyone is pretty familiar with the whole crowdfunding phenomenon. If you haven’t contributed to a campaign yourself, the name Kickstarter has become the face of innovation and debt-free startup funding and is immediately recognizable.
Between Kickstarter and Indiegogo, another popular crowdfunding website, I’ve purchased the best ever device charger, a DSLR remote and a freaking amazing beehive that will deliver my honey effortlessly with the mere turn of the spigot!
From books to film to clothing, technology and more, the list of opportunities to fund great – and not-so-great – ideas has become truly infinite.
The term “crowdfunding” may not be entirely accurate.
While the expectation is the awaiting “crowd” eager to support the next great innovation, more specifically it’s referring to the collective, cooperative networking and pooling of financial resources via the Internet to support a cause, startup business, or social enterprise. At it’s essence, a crowdfunding campaign leverages small contributions from many parties.
Crowdfunding is used to create viral online campaigns that raise awareness, fundraise, friendraise, build buzz, and generate support for a particular project.
New crowdfunding rules across Canada are opening the door
For Canadian retail investors looking to put dollars directly into companies that want to raise funds in the private capital market, new rules are making this more feasible.
Until recently, the majority of retail investors were locked out of Canada’s private capital markets – mainly for their own protection. Companies looking to gain access to capital were limited to accredited investors, usually those with a net worth of $5-million or $1-million of investable assets.
Accredited investors make up only about 4 per cent of the Canadian population, according to the Ontario Securities Commission; such a small percentage was limiting the pool for Canadian companies to gain access to capital.
Now, that’s changing, as a number of provinces have implemented regulatory changes allowing businesses to have access to a bigger pool of investors for crowdfunding opportunities. These are known as “exemptions” and there are some key differences that retail investors should note.
Previously, if a company wanted to raise capital from retail investors, typically the only available exemption was through an offering document – which is any material used by a company to sell its shares. Companies rarely used this kind of exemption, as it was time-consuming and expensive to compile these documents and targeted only a small pool of accredited investors.
In British Columbia, we’re seeing the benefit of the changes.
An initiative of Community Futures, InvestLocalBC allows local nonprofits, the arts communities and business startups to create online forums to find the funding and support necessary to grow and evolve their ideas and projects in our local regional communities.
Accelerating ideas into reality through local investment.
InvestLocalBC.ca helps jumpstart creative and innovative ideas, providing an online platform from which to generate financial investment and collaboration.
Here’s how it works: what comes first is your time, elbow grease and creativity.
Launching a campaign is free. Leveraging the expansive network of the Community Futures initiative throughout the province, InvestLocalBC affords you the power to direct your campaign where you want it and who you want it directed to with only a small fee deducted from your successful campaign.
Local investment empowers our communities.
The backbone of InvestLocalBC is community empowerment for nonprofits, business and artisans.
Crowdfunding campaigns aren’t just about the money. Getting the information out to potential supporters is essential and these campaigns have to speak to the community, providing the necessary information so as to drum up the necessary investment.
InvestLocalBC provides a directory for individuals, businesses, governments and industries to discover all of the various projects in each region of the province, from nonprofit to cultural to business startup projects. More importantly, it helps to gauge public support for these projects. If a potential supporter or investor anywhere in the world would what kind of support a project is generating, they can get a good sense of it by the amount of funds raised to date. If they’re just looking to support a project in a certain area of the province, InvestLocalBC provides the easy, user-friendly platform to do just that.