Whilst the SEC continues to work through the technicalities of implementing equity crowdfunding in the US, the process appears to be well under way in nearby Canada.
SeedUps Canada – North America’s first ever equity crowdfunding platform – allows non-accredited Canadian investors to back startups and small businesses from a number countries. The platform tells us that the Canadian government has demonstrated a progressive stance towards equity crowdfunding. SeedUps claim that the Canadian market is well ahead of its US neighbours, and that specific crowdfunding regulations are expected to arrive in 2015. We caught up with the platform for a deeper insight:
Can you briefly introduce the platform for us?
SeedUps Canada is North America's first equity-based crowd-finance platform, offering securities to non-accredited investors via the internet. Right now we’re fielding hundreds of requests from startups and small businesses looking for a new way to raise money, AND we are seeing strong interest from the investing public, aka the crowd, for making investments in companies that they may not have otherwise been able to approach.
What is the regulatory scene like in Canada?
In Canada, we do not have a central securities regulator, like the SEC in America. However the regulatory bodies across Canada have found ways to create a framework that allows for businesses to operate in a reasonably efficient manner while raising capital. Specific to equity crowdfunding, or more particularly to raising money from non-accredited investors, we have available an exemption that we at SeedUps have been able to become very efficient at using. Looking forward, in early 2015 we expect to have true crowdfunding regulations in place which should allow for even more efficient capital raises. Canada has been very progressive, for North America, in seeing the value and benefit that crowdfunding can bring, while still being able to offer investor protection.
Which countries are you active in?
We are based in Calgary, Alberta, but operate nationally within Canada, and we can also raise money for foreign companies too.
Can you compare the Canadian and UK equity markets - in terms of maturity, diversity, regulation, etc.?
Well if you are asking about the overall equity markets, I would say they compare favourably in both UK and Canada. Both have a long-standing and robust regulatory environment in which to operate, and investor protection is paramount. However, if you were to compare equity crowdfunding, clearly the UK has a leg up. The best known crowdfunding platforms in the world were launched in the UK, while we at SeedUps have only been operating since March and are alone in raising money for start ups and early stage companies. We are moving along quickly however, as noted above we will soon have specific crowdfunding regulations so we will be on par to the UK in that sense, and well ahead of the USA.
What makes Seedups stand out in the equity space?
I think what makes us standout is partly the ease of transacting business on our portal (the first non-accredited investor in North America to make an investment did so on her iPhone) and the fact that our low fee structure ensures investors that the maximum amount of money stays with the entrepreneur.
Who can be an investor?
On SeedUps Canada anyone can be an investor, but we do do a "suitability" assessment to go as far as we can to protect the investor and provide them with investments that don't overly risk their portfolio.
What are your thoughts on how investors should be approaching equity crowdfunding?
We think that investors should look to equity crowdfunding as a fun way to discover new companies, and yet hold out for those that would appear to have the right secret sauce for success!
In the UK, retail investors are only allowed to invest 10% of their investible assets into equity crowdfunding - what do you think of that? Sensible or stifling?
I think it’s a bit low.