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
an updated Private Placement Market webpage with information about the new start-up crowdfunding exemptions
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]
BCSC staff ambassadors tour the province, helping people to protect themselves from fraud and unsuitable investments. Our goal is to enable BC investors to develop critical thinking skills so they can become more informed of steps they should take to protect themselves when investing. Where we are this month Qualicum Probus Club […]
The Canadian Securities Administrators (CSA) are encouraging investors nationwide to participate in Check Registration Day, a nationwide event that is entering its second year. Getting involved is easy. Take a few minutes today to use the National Registration Search at aretheyregistered.ca to see if your financial adviser or investment firm is registered. Another option open […]