On May 29, 2014, I attended and spoke at a full-day conference held
by the Equity
Crowdfunding Alliance of Canada (the
ECFA) in Vancouver, British Columbia. I was
interviewed by Sydney
Armani, Founder of Crowdfundbeat during the conference to
discuss ECFA's cross country tour on equity crowdfunding
including highlights from the Vancouver event. Special thanks to
Peter-Paul Van Hoeken who was the Chair and key organizer of the
Vancouver conference and to ECFA Co-Chair Oscar
Jofre, President of BoardSuite.
As Sandi Gilbert, founder of SeedUps Canada, stated at the
Calgary ECFA conference, "Equity crowdfunding is about
owners not donors." This concept applied equally at
the Vancouver ECFA conference which featured:
discussions involving, pre, during and post funding; and
a panel discussion by angel investors who shared their views on
Three interesting observations that I took away from the
Vancouver ECFA conference are discussed below.
1. Some individuals were incorrectly equating equity
crowdfunding solely with the proposed start-up
As explained in my presentation, there are other ways to do
equity crowdfunding in Canada and the start-up crowdfunding
exemption is at the low unregulated end of the capital raising
ecosystem. For example, the start-up crowdfunding exemption is
presently legal in Saskatchewan and under consideration by other
provinces including New Brunswick and Quebec.
Additionally, in Canada a registered exempt market dealer
(EMD) can raise capital on the internet under
existing prospectus exemptions, such as the accredited investor
exemption and the offering memorandum exemption (which is available
in all jurisdictions in Canada except Ontario, where it is under
EMDs, such as SeedUps Canada, Optimize Capital and The Funding
Portal are raising capital under existing prospectus exemptions,
with many other portals in the process of getting registered with
various securities commissions.
It should be noted that the British Columbia Securities
Commission has publicly stated that equity crowdfunding has been
legal in British Columbia for years under the offering memorandum
exemption when capital is raised through an EMD.
2. Many individuals were concerned that the proposed
start-up exemption includes an unregistered funding
There was concern that an unregistered funding portal would
increase the likelihood of fraud since the portal would have no or
This is in contrast to the requirement to have a registered
funding portal under the proposed Equity or Integrated Crowdfunding
Exemption presently being considered by Ontario, Quebec and other
3. Some attendees, including those from the angel
community, incorrectly believed that equity crowdfunding would
provide them with an exit or liquidity event.
Equity crowdfunding is not the universal panacea for liquidity
or exits for angels and other investors.
In Canada, securities acquired under a prospectus exemption are
subject to resale rules and are generally illiquid for
non-reporting issuers. It is not clear why certain angel investors
believed equity crowdfunding would provide them with the type of
liquidity and the exits they presently do not have under existing
Canadian securities law.
At the Vancouver event, I suggested that the Canadian
Securities Administrators should consider resale rules involving
equity crowdfunding as Phase II to its equity crowdfunding
proposals. Otherwise, developing a specific equity crowdfunding
framework would be bogged down in regulatory discussions for quite
some time and may in fact never see the light of day.
Moreover, liquidity in the private markets is an industry issue
generally rather than a specific equity crowdfunding issue.
Other ECFA Conferences
The ECFA previously held conferences in Toronto, Calgary and
Vancouver and will be holding a full day conference on June 3, 2014
in Ottawa and June 10, 2014 in Montreal where I will also be
presenting. You can obtain more information here about the date, location and
other particulars for these ECFA conferences.
Enjoy the interview and special thanks to Mr. Armani who is one
of the leading experts in equity crowdfunding in the United States
and around the world.
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guide to the subject matter. Specialist advice should be sought
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