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 – February 2013

Reading Break: Put our Guide on your iPad and take it to the beach

RRSP Season 2012: Fund Facts for mutual funds

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