Start-up crowdfunding

Start-up crowdfunding

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 funding portal website and involve significant risk.

For information about start-up crowdfunding select from the options below.

• Start-up Crowdfunding Guide for Investors
• Start-up crowdfunding rules and exemptions
• Overview of start-up crowdfunding rules
• Start-up crowdfunding funding portals

Start-up crowdfunding rules and exemptions

In Canada, there are rules and procedures in place that govern how businesses and funding portals conduct start-up crowdfunding. Certain provinces have also created start-up crowdfunding registration and prospectus exemptions, in order to make the system simpler for businesses. The provinces with exemptions include Saskatchewan (Start-up Crowdfunding exemptions), British Columbia, Manitoba, Québec, New Brunswick, and Nova Scotia (known together as “the participating jurisdictions”).

Overview of start-up crowdfunding rules

• Both the business and the investor must be located in one of the participating jurisdictions.
• Businesses can have two start-up crowdfunding distributions per year, and raise up to a maximum of $250,000 in each distribution.
• No person or company may invest more than $1,500 in any one start-up Crowdfunding distribution.
• The business cannot be a reporting issuer or an investment fund.
• Businesses must post their start-up crowdfunding offering document on a funding portal’s website. The offering document describes the security the business is offering to investors.
• The funding portal facilitates the trade between the business and an investor by electronically receiving payment for the security purchase.

Start-up crowdfunding funding portals

The following is a list of funding portals operating in Saskatchewan:

• FrontFundr
• CanaDragon Enterprise Equity Crowdfunding Interchange
• Vested Technology Corp
• Wayblaze Crowdfunding Inc. 

For information regarding start-up crowdfunding funding portals in other participating jurisdictions, please contact those jurisdictions directly.