Equity Crowdfunding Portal Update and Slide Deck “Securities -Making Equity Crowdfunding Legal”

alfred-palmer-crowdfundingNew equity crowdfunding portals are starting to emerge across Canada. Five new portals became active since my last presentation on this topic in February this year, and one portal closed due to the unexpected death of its founder.

Three of the new crowdfunding portals in Canada focus on real estate investments in Ontario: Brix RCR, Open Avenue and R2Crowd.  NexusCrowd, which launched in the fall of 2015, is the only other real estate crowdfunding portal in Canada at this time. NexusCrowd, Brix RCR and R2Crowd each plan to focus on investment opportunities in the Ontario commercial real estate market. Open Avenue plans to focus on the housing market. All four of these real estate crowdfunding platforms are registered as exempt market dealers either directly or through a third party (R2Crowd relies on the registration of Waverly Corporate Financial Services Ltd.).  Each platform plans to rely primarily on the accredited investor exemption. Brix RCR, R2Crowd and OpenAvenue also expect to a lesser extent utilize the integrated crowdfunding exemption. NexusCrowd is the only one in this group that has an investment listing on its website at this time.

The other two new crowdfunding portals, Bay Street Cannabis (Ascenta Finance Corp.) and Klondike Strike (Red Cloud Klondike Strike Inc.), are also registered as exempt market dealers. Bay Street Cannabis, as its name suggests,  plans to act as an equity crowdfunding portal for cannabis companies. Klondike Strike plans to act as an equity crowdfunding portal for mining companies. Each platform plans to rely on all available prospectus exemptions that may be applicable in the jurisdictions where they are qualified as registered dealers. Bay Street Cannabis does not have any investment listings on its website at this time.  Klondike Strike currently has two investment listings.  The head office of both these portals is in Ontario.

The portals relying on the Start-Up Crowdfunding provisions for their license to operate are starting to list investment opportunities on their respective portals. Vested has posted a junior mining exploration investment. GoTroo is about to close its first investment campaign for a smart home tech company.  SmallStarter is collecting expressions of interest for an investment in a local brewery business it plans to launch shortly. StellaNova and InvestLocalBC are currently looking at potential investment listings and are expected to launch their first campaigns in the second quarter of 2016.

FrontFundr (Silver Maple Ventures Inc.), as an exempt market dealer, offers investment opportunities on its portal relying on the start-up crowdfunding exemption, the integrated crowdfunding exemption, accredited investor exemption and offering memorandum exemption.  FrontFundr currently has five active campaigns and twenty-eight (28) companies in their prospect lounge. The investment opportunities listed are primarily focused in the tech and industrial space.

SeedUps, as an exempt market dealer through Waverley, offers investment opportunities on its portal relying on the accredited investor exemption and offering memorandum exemption. SeedUps currently has six active campaigns, four of which are in the food and beverage industry.

InvestX, as an exempt market dealer through Waverley, is currently offering two later stage U.S. based tech investment opportunities. One is a fund and the other a direct investment. Campaigns listed on InvestX are made available through the accredited investor exemption.

Optimize Capital Markets (P2P Financial Inc.), as an exempt market dealer, has sixty-three (63) companies currently listed on its OCMX institutional marketplace. OMX is also registered in the United States as a broker-dealer.  OCMX relies on the accredited investor exemption in Canada and the United States.  It is the oldest crowdfunding portal in Canada.

CrowdMatrix is currently completing its registration process as an exempt market dealer.  This process has not been completed despite references to being an exempt market dealer on their portal website.  Once they have been registered as a dealer they plan on utlizing the accredited investor exemption to bring tech company investment opportunities to the public.

Canadian business owners also can avail themselves to debt financing through one of the new marketplace lenders operating in Canada. FundThrough, Lendified, Lending Loop, Driven (formerly Thinking Capital) and OnDeck all offer a streamlined online alternative to bank debt financing. ATB Financial and InvestNextDoor are expected to offer further choice to small businesses in Canada in the second quarter of 2016.

Last week on March 16, 2016, I was a speaker at the 2016 Community Crowdfunding Summit in Prince George, British Columbia.  My slide deck, although similar to past presentations I have made, is updated to reflect recent changes.  This includes updating the active equity and debt portal slides.

The audience was terrific. I was the last speaker of the day. Not one person nodded off or left despite having been at the event since 8 am that morning.  The desire and willingness to learn was definitely present in that room to the very end.

Thank-you Community Futures BC for organizing the event and inviting me to Prince George.

[slideshare id=59647161&doc=community-futures-equity-crowdfunding-2016-160316184423]

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