Equity crowdfunding is growing fast in the U.S. and it is gaining momentum in Canada. Why not combine our successes?
Over the last seven years, FrontFundr has had a front-row seat to the growth of the Canadian tech ecosystem. We have seen a vast increase in traditional venture capital being poured into Canadian startups and rightfully so: the Canadian tech ecosystem is thriving. We’re the birthplace of tech leaders like 1Password, Shopify and WealthSimple.
Canadian startups raised a record CA $14.2 billion in venture capital last year. Investments came from homegrown and U.S.-based VC firms and, in 2020, more than half of the deals made in the Toronto area included investments from our neighbours down south.
American venture capitalists see the potential in the Canadian tech scene and are acting on it. Retail investors should get the same opportunity. Likewise, Canadian retail investors are hungry for the chance to invest in the US $329.9 billion U.S. capital market.
Equity crowdfunding in North America
The global equity crowdfunding market is growing at a compounded annual growth rate of 15%. In countries like the U.K., equity crowdfunding has already gone mainstream, with around 40% of U.K. startups utilizing equity crowdfunding to raise capital.
In North America, equity crowdfunding is becoming widely adopted as a viable alternative and complementary funding source for startups, scale-ups and later-stage private companies.
As a result of the JOBS Act signed in 2012, new equity crowdfunding rules were introduced in the U.S. with Reg A and Regulation Crowdfunding.
In Canada, similar equity crowdfunding rules were introduced in 2015 by provincial securities regulators. In September 2021, the provincial regulators introduced the nationally harmonized investment crowdfunding rule which enables private companies headquartered in Canada to raise up to CA $1.5 million per twelve months period from non-accredited investors.
Combining our forces
As Canada’s leading equity crowdfunding platform, FrontFundr has done a handful of cross-border capital raises in collaboration with U.S.-based platforms including StartEngine, Republic, and Wefunder. U.S. investors would invest in a company through one of the U.S.-based platforms while FrontFundr enabled Canadians to invest in the company as well.
Equity crowdfunding opens the doors to a new source of capital—cross-border listing extends this access to more investors than ever before.
Peter-Paul Van Hoeken
Founder & CEO, FrontFundr