Invest Crowdfund Québec

Pour l'adoption d'Invest Crowdfunding au Québec | For the adoption of Invest Crowdfunding in Quebec


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[Breaking News] Canadian Regulators Open Consultation on New Proposal

As the United-States have good reason to celebrate – 5 States have legalized equity crowdfunding  and 16 others to follow -, our own provincial authorities – four provinces to be exact – have published two new crowdfunding exemption proposals and seek comment. In consideration of two different sets of client needs: SMEs and start-ups. We salute their effort in doing so.

Our team,  with representatives of diverse industries and professions,  shall scour the 300+ page documents with great interest and attention to detail. We will provide an update of our analysis.


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Quebec Organizations Support Equity Crowdfunding

Invest Crowdfund Québec (ICC-Q) has just released its position paper (in French, for the time being) following the Quebec Securities Commission’s (AMF) call to comment.

At the eve of our meeting with the AMF, 8 organizations and associations showed their support to Equity Crowdfunding by co-signing out position paper.

These organizations are: The Quebec Association of IT Freelancers (AQIII), Alliance numérique, the Centre facilitating research and innovation in organizations (CEFRIO), Medical Device Canada (MEDEC), Computer Research Institute of Montreal (CRIM), Society for Arts and Technology (SAT), TechnoMontréal et La Voix des Entreprises en Technologie de l’Information de Québec (VETIQ).


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Huit organisations québécoises montrent leur support au Crowdfunding par capital

Invest Crowdfund Québec (ICC-Q) publie son document de travail traitant des dix questions soumises par l’Autorité.

Pas moins de huit  associations et organismes ont montré leur support en co-signant le présent document:  l’Association québécoise des informaticiennes et informaticiens indépendants (AQIII), l’Alliance numérique, le Centre facilitant la recherche et l’innovation dans les organisations (CEFRIO), le Medical Device Canada (MEDEC), le Centre de recherche information de Montréal (CRIM), la Société des Arts Technologiques (SAT), TechnoMontréal et La Voix des Entreprises en Technologie de l’Information de Québec (VETIQ).

 

 


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A Look-back at the AMF Public Consultation on Equity Crowdfunding

Last March, the Quebec Securities Commission (AMF)  held a public consultation to discuss Equity Crowdfunding and its applicability. Our team has been working tirelessly since July for this moment. With  “success stories” multiplying across the globe, we, too, want our SMEs and start-ups to benefit from this model. Enabling them to raise funds online and individuals to become investors without having 1M$ in assets. Angels and VCs  around the table agreed that this model complements the existing ones, and that it is  a necessary component to our ecosystem…”we fund 30 out of 1300 startups. What happens to the remaining 1270?” one angel asked.

You will find a recap of the session on our partner site, National Crowdfunding Association. The following outlines some of the principles raised in session and that you will find in our upcoming positioning paper:

  1. Notion of risk. A business is pitched on a crowdfunding portal. There is always a potential risk notably if the business is early stage (prototype, beta) that the investor may not see a return. The investor must be at ease with this and rely on his own knowledge or seek council.  On the other end of the spectrum, a business that has sales to show for, will be expected to justify its valuation and have the figures to back it up. Transparency is key.
  2. Trust the crowd (unaccredited investors). We do not expect a perfect fit in year 1 of adoption. There will be growing pains as there were for e-commerce in the late 90’s. The important is to leverage these and build best practices. You may find investors that are not satisfied with their choices and may blame others. We believe that this learning phase will be a confidence builder and they will find, with time, better sources of advice on and  off line.
  3. Higher Cap . To ensure a higher penetration rate and fulfill the needs of both start-ups and SMEs, we recommend raising the investment round to 1M$ on a 12-month period.
  4. Relying on social networks. This is where the paradigm shift must occur. I understand that it may hard to believe that online conversations can help detect fraudulent practices but it is a fact. As Kickstarter’s founder said, “People have called them out and they don’t get funding. The internet asks questions.”
  5. The shareholders agreement generated much discussion among the securities lawyers present at the session.  Experience shows that agreements are source of fraud either through restrictive clauses or fine print. Hence they believe that Invest crowdfunding may be the host of such practices. We recommend having standard shareholder agreements (same format for all) to reduce collateral dammage. This point remains to be discussed and should not be a barrier to adoption.
  6. The status of Equity Crowdfunding portals is an important issue.We believe that portals, as in England, France, Finland, Belgium and Australia, should stand as a matchmaking site – nothing more, leaving advisory to others. It is the investor’s responsibility to seek council (cf. point #2) and the issuer’s to pitch/explain in layman’s terms.  To restrict portals to traders only or to restrict portal usage to accredited investors is taking the crowd out of crowdfunding. It’s VC online, as provided by FundersClub.  Portals in Quebec, Ontario and Alberta are in the works . They are waiting for the green light.

At Invest Crowdfund Québec, we will continue our work with regulatory bodies and remain optimistic about the prospect of equity crowdfunding in Canada.


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The AMF To Hold a Public Consultation on Equity Crowdfunding

amf2“Aware of the financing needs of early stage businesses and other small and mediumsized enterprises (the “SMEs”), the Autorité des marchés financiers (the “AMF”) is examining options that can help meet these needs without compromising investor protection.”  One of these options being Equity Crowdfunding.In order to facilitate the raising of capital by these businesses, the AMF issued a blanket order on December 20, 2012 exempting certain issuers from some of the requirements in respect of the offering memorandum exemption (the “OM order”). The offering memorandum exemption (the “OM exemption”) could be used as a framework for the potential implementation of an equity crowdfunding regime in Québec.”

The AMF has invited all interested parties to express their views on the OM exemption, the OM order and equity crowdfunding in a public consultation to be held March 20 during which Invest Crowdfund Quebec and other organisations will share their position  and explain how it can solve an ever-growing gap for start-ups and SMEs. Since our initial meeting with the AMF in September, the international ecosystem has known significant changes and  “success stories” are no longer the exception. This is very exciting for Quebec.

Whom is this consultation intended for? All interested parties, namely:

– members of management of companies seeking financing, particularly early stage businesses and other small and medium-sized enterprises;

– individual and institutional investors;

– dealers, representatives and other registered persons; and

– lawyers, accountants and other professionals offering services to issuers


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Women Entrepreneurs: For That Reason, I’m Out

Forbes published yesterday an accurate account of women’s actual status in the investment arena. Poor metrics to say the least, according to the US Department of Commerce survey.

Fact #1: Men fund men, women fund women. 88% of angels are men, so a big chunk of the pie goes to the male gendre. In this day and age, it’s hard to believe that this is still the norm.

Fact #2: For that reason, I’m out. No, seriously. It’s for that reason that women have more difficulty getting financing outside of their close circle. Unless you have a rich uncle who enjoys betting on the next best thing, love money doesn’t get you far.

With the advent of equity crowdfunding across Canada, we may just see a reversal of fortune. The market is ready. Donation-based Indiegogo already boasts 45% of female campaigners. Why should it be any different in the equity part of things?

Full article “Why Crowdfunding is a Game-Change for Women Entrepreneurs”