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Getting Crowdfunding Legalized for Canadian Startups

document Crowdfunding

Getting Crowdfunding Canadian Startups
February 8, 2012 by ideavibes

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In November I blogged about the crowdfunding bill that was passed by the US House of Representatives on November 3rd, 2011. The Entrepreneur Access to Capital Act – or H.R. 2930, if it gets passed by the Senate, would allow startups to offer and sell securities through crowdfunding sites and social networking sites. This would be a huge opportunity for startups in the US, making it easier for them to raise the necessary funds to get their company off the ground. But what about Canadian startups? What about Canada? I was recently included in an itbusiness.ca article, “Legalize crowdfunding or risk losing startups to U.S., CATA says,” written by Christine Wong. The article explains the current situation startups are faced with when trying to raise funds: “Under current U.S. and Canadian laws, startups can only accept equity investments from venture capital funds or small angel pools like friends and family. Any large scale equity fundraising outside of those sources requires a company to go through the lengthy and expensive process of filing a prospectus with securities regulators.” It was a year ago that we launched Fundchange.com, a crowdfunding site to help non-profits raise funds for various projects.

In the itbusiness.ca article, they touched on the fact that Ideavibes has developed a social media platform for equity crowdfunding for startups and why we can’t launch it yet: “But it can’t deploy that platform because Canadian law bans startups from offering equity shares or a percentage of revenue in exchange for money raised through crowdfunding. “I believe the Canadian government is very behind in this and should be pushed harder because access to capital is a big issue. Making it easier for startups to get that money is important,” said Dombowsky, who emphasized it was tough for him to get his own company going with just $30,000 of seed money.” Crowdfunding is a great way for startups to raise the money they need. Getting smaller amounts of money from a larger group of people tends to be an easier task than asking a handful of people for a large sum.

Summary
Crowdfunding is a great way for startups to raise the money they need. Getting smaller amounts of money from a larger group of people tends to be an easier task than asking a handful of people for a large sum.

Description
In the itbusiness.ca article, they touched on the fact that Ideavibes has developed a social media platform for equity crowdfunding for startups and why ideavibes can’t launch it yet:

"But it can’t deploy that platform because Canadian law bans startups from offering equity shares."

“I believe the Canadian government is very behind in this and should be pushed harder because access to capital is a big issue.Making it easier for startups to get that money is important,”said Dombowsky, who emphasized it was tough for him to get his own company going with just $30,000 of seed money.

Tags: CATA, Crowdfunding, Crowdfunding for Startups, Entrepreneur Access to Capital Act, fundchange, Startus

Posted by Luis Enrique Morales

Feb 09, 2012 02:09 am GMT Viewed 2171 times

Author: ideavibes Source

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