Most conversations we’ve had around crowdfunding revolve around the concept that it allows the average Joe to make an investment in a startup project. But why can’t accredited investors get in on the fun too? Our friend Shane Schick writes about a Bay Street firm, Optimize Capital Markets, about their crowdfunding portal targeted specifically at accredited investors.
Most people spending time on the Web are by now familiar with the crowdfunding model put forward by Kickstarter or Indiegogo – a company or individual asks for consumers to fund their campaign in return for the promise of future rewards or picks. But there’s also a movement to make equity-based crowdfunding possible in Canada being spearheaded by Invest Crowdfund Canada and the National Crowdfunding Association of Canada. The concept is simple enough: instead of a perk such as a promised product delivery or a great T-shirt, an average person could own a small stake in the company. While the U.S. paved the legal path to make this type of crowdfunding possible last year with the passage of the JOBS Act, Canada’s provincial regulators are still discussing whether it’s a good idea or how to go about it.
The fact a firm is pursuing institutional crowdfunding is a reflection of that legal reality in Ontario. While it can’t target the mass market, Optmize Capital Markets is building its model around the people that are legally allowed to make direct investments in startup firms. But if the Ontario Securities Commission decides to change its regulations then a firm like this could be in a good position to open its platform to more users.
Also, if the firm is successful, it will be a proof of concept for crowdfunding. Accredited investors have other avenues to park their money, so if they flock to a crowdfunding portal, it will show the model can truly be a disruptive vehicle for venture fundraising.
[Source: Brian Jackson @ Y! Finance CA @ ITBusiness]