You might have heard the British Columbia Securities Commission and other regulators from certain jurisdictions have adopted start-up crowdfunding exemptions.

Crowdfunding has been a popular way to raise money for some time. The model you are most likely familiar with is crowdfunding by way of donation or pre-sale, in which you donate money via the Internet to a project like a film, cultural event, or product pre-order. In return, you may get your name in the credits, a copy of the film, or the manufactured product.

Under this model, which co-exists with the new start-up crowdfunding exemptions, businesses are not offering securities (such as shares or bonds), so they do not fall under Canadian provincial or territorial securities laws.

The new start-up crowdfunding exemptions allow companies to raise money by offering investors securities. Canadian Securities regulators refer to this as the securities crowdfunding model – it’s also referred to as equity crowdfunding.  In this type of crowdfunding, a start-up or early-stage business solicits funds from investors through a website, known as an online funding portal, in exchange for its securities.

Before you invest in a securities crowdfunding campaign, you should do your research. These investments are high risk and you could lose your entire investment.

There are a number of new and updated resources available to investors interested in learning more about crowdfunding. They are:

a new guide with information on how crowdfunding investments work

a new webpage with crowdfunding guides for investors as well as guides for issuers and funding portals

an updated Private Placement Market webpage with information about the new start-up crowdfunding exemptions

an updated Guide to Investing in the Private Placement Market for Retail Investors

If you have any questions about the new start-up crowdfunding exemptions, please call BCSC Inquiries at 604-899-6854 or 1-800-373-6393, or email us at [email protected]

Suggested Reading

BC Securities Enforcement Roundup – December 2013

Retiring alone? Beat the odds by planning ahead

BCSC Study Finds Improved Investor Knowledge Following New CRM2 Reports

More Resources

Investment Caution List: New York-based investment firm and five others added to list

A purported New York-based investment firm that was advertising its services in online classifieds is one of six recent additions to the British Columbia Securities Commission’s Investment Caution List. BCSC staff added High Profit Investment Ltd. to the Investment Caution List after finding out the firm solicited BC residents to open trading accounts and have […]

BCSC presents Be Fraud Aware: The Musical in Victoria to help British Columbians become smarter investors

In support of Fraud Prevention Month, the British Columbia Securities Commission (BCSC) today surprised Victoria residents with a spontaneous live musical performance highlighting the dangers of investment fraud.