The rules posted yesterday by Canadian securities regulators are still being digested, but upon first read, they appear very encouraging for Canadian startups, small business and even public issuers. The regulators have struck a balance by ensuring investor protection via caps, while giving portals and issuers modest oversight and the latitude they require to raise critical funds via portals like FundRazr. While some portals have established themselves by model
as “equity” or “donations” or “rewards” –
FundRazr believes that it is in the best interests of the entrepreneur to provide a broad range of solutions that can be accessed as needed stages during the growth cycle from a
single expert platform provider. In our opinion, this “funding continuum” will then continue into
later stage venture capital or institutional funding by existing players. This has been validated by platforms like Circle Up in the consumer packaged goods space.
As background, FundRazr is Canada’s most successful crowdfunding platform with $44M raised
December 2013, FundRazr announced our intent to offer a “continuum” of funding solutions for
entrepreneurs beyond the donations and rewards currently offered. Here are four key reasons why the funding continuum born in Canada is going to help drive entrepreneurial funding.
1. The ability to build start-ups, not a portal community
A myth exists that certain platforms
chiefly Kickstarter and Indiegogo
have funding communities that can be tapped into, simply by posting Rewards campaigns on those sites. The reality is that entrepreneurs need to bring their own community and then platforms can help amplify those communities to ensure successful campaigns.
The solution is to allow entrepreneurs to run the “whole” campaigns on the
ir own sites and on the platform simultaneously. This drives the traffic to the startup webpage or Facebook page and builds the community for the startup, not just for the platform. That sets the stage for follow-on campaigns later. For example, followers of a donation campaign at seed stage will be likely customers upon a pre-order or rewards campaign. Now curated as advocates, those same early followers will get the opportunity to invest
turning customers into shareholders. The community and relationship will be cultivated efficiently as the platform has made the administration and communications easy, fluid and all taking place on multiple sites that the entrepreneur desires.
2. Canadian market and technological expertise
The securities, web and payment regulations landscape differs widely by jurisdiction. Cross- border issues exist. The support ecosystem that is evolving
financially, legally, and through marketing
needs to understand the local landscape. We feel that this will mean optimal funding solutions born in Canada. As Canadians, we often see U.S. technology providers struggle to navigate our laws, culture and other market requirements. However, Canada is more than the 51st state and Canadian platform