Equity crowdfunding is a type of equity financing whereby people (‘the crowd’) invest in an early-stage unlisted company, in exchange for shares (equity) in that company. Is your business ready to take on investors?
Equity crowdfunding is a type of equity finance whereby people (‘the crowd’) invest in an early-stage unlisted company, in exchange for shares (equity) in that company. Individual investors thus become shareholders and stand to profit if the business does well – they might also lose some or all of their investment. Equity crowdfunding usually takes place over an online platform.
Geared towards B2C based businesses given the viral effect of a crowd campaign. Normally targeted at Seed Stage businesses, Canadian businesses can raise up to $1.5m which is an upper limit enforced federally by The Canadian Securities Administrators (CSA).
You have to bring at least 20% of the money to the table before you can raise on a crowdfunding platform
You get charged on the money you bring to a crowdfunding platform
You have to share a lot of documents and information publicly, so easy for competitors to get hold of
From small businesses it is a large upfront cost in time and money in creating all the video and image assets needed for the campaign
The main thing to assess when analysing a crowdfunding platform is the size of the their funding network, their funding roadshow roadmap, case studies of businesses like yours, what % they're going to charge you, what $ they're going to charge you on the money you've already raised, the minimum amount of money you need to have raised before going on the platform, confirm the use of a nominee structure, and campaign commitments before launch in terms of time and investment.