When it comes to crowdfunding, up in the Great White North of Canada there’s a new mountie in town… it’s called FundRazr, and it seeks to do for crowdfunding up north what Kickstarter has done for the U.S. And it’s doing it more in the traditional European fashion of equity crowdfunding, rather than reward fulfillment.
Here at FundRazr, we want to replicate the European experience in Canada. Allowing small businesses access to the capital markets they were previously priced out of.
The new site is called FundRazr, and it since its inception, it has raised over $40 million in start up capital for over 40,000 campaigns in 20 different countries. Believing that crowdfunding is primarily a marketing campaign, rather than a financing campaign, and as such, relies heavily on Social Media to get the word out.
FundRazr has a flexible business model that allows them to raise money for just about any purpose from starting a business to raising funds for long term illness. “Contrary to some other crowdfunding platforms, our platform does not limit the type of campaigns we host,” says the About page of FundRazr.com. “We want to be flexible and available to everyone, for any kind of cause, from almost anywhere in the world.”
Humble Grape's model for raising funds is a perfect case study for what other small companies should aspire to: establish some clientele, have revenue flowing, connect with suppliers, and understand why money is needed to expand.
Currently, FundRazr has the typical option of All or Nothing or a flexible funding campaign with Perks, Rewards, etc. Fees break down to listing your campaign for free, and then payment of 5% FundRazr fee plus Payment Provider fee of 2.9% + 30 per transaction. But now, FundRazr is looking to the European model of equity funding for their commercial business campaigns. “The restrictive market for investing is on the way out,” writes?Robert DeFilippi of FundRazr, ”and is being replaced with a flatter, more transparent, crowd based platform …The evolution of crowdfunding from rewards to equity is just a natural progression of the market.” DeFilippi cites a British wine company, Humble Grape, who recently raised over 330,000 in an equity campaign for expansion plans to their wine business.
We want to put funding in the hands of people who are trying to build something, funded by people who believe in their ideas. With liberalized securities regulations unfolding in the USA and Canada, non-accredited investors will be able to participate in exciting new investment opportunities (where legal) for the very first time.
The new equity model comes after Canada has changed the way changed the way crowdfunding works up North. Following the European experience, new rules allow for raising of equity capital online in increments of either $150,000 CAN twice a year, or one $1.5M campaign annually. The more a company seeks the raise, the more they are required to report financial statements and be audited to make sure the money raised is going where it should.
Other rules require that campaigns be owned by Canadians and approved by the appropriate provincial jurisdiction authority. The idea here is to keep Canadian money in house and to prevent those living outside of Canada to benefit from Canadian backing. That makes a lot of sense and as the filmmaking community can attest, it’s inline with Canada’s protectionist policies of job creation and finance. The new rules are currently in effect in the province of Saskatchewan, but will be rolled out to British Columbia, Ontario, and Quebec by the Fall. Smaller provinces of New Brunswick and Nova Scotia have opted to adopt similar rules with their own spin as well, giving up to 98% of Canadians the ability to engage in equity crowdfunding by the end of the year.
So with the benefit of tax breaks, dollar exchanges, and now equity crowdfunding, it looks like business is good in the Great White North.