You may have heard of crowdfunding as a way for small businesses or creative projects to raise funds online from the public. Traditional crowdfunding (non-securities based) typically involves raising money through donations or by pre-selling products. Start-up crowdfunding, however, is a process of investing in a start-up or early-stage company by buying securities, such as debt securities (like bonds) or equity securities (like shares). Start-up crowdfunding investments are made on-line through a crowdfunding portal website, and they involve significant risk.
In Canada, there are rules and procedures in place that govern how businesses and funding portals conduct start-up crowdfunding. These rules are found in National Instrument 45-110: Start-Up Crowdfunding Registration and Prospectus Exemptions.
To determine whether a Start-Up Crowdfunding Portal is exempt from registration under NI 45-110, please use the following link: (https://www.securities-administrators.ca/registration/are-they-registered/).