Canada: Will Canada Make Room For Crowdfunding?

When the U.S. recently changed its securities laws to enable equity crowdfunding, advocates of the practice to the North started urging Canadian securities administrators to follow suit. What reforms are needed to enable equity crowdfunding in Canada? Taking a closer look at how crowdfunding fits (or more to the point, does not fit) with current Canadian securities law and comparing the experience of other countries should help answer this question.

The Crowdfunding Concept

Crowdfunding and crowdsourcing cover a range of activities – from charities soliciting donations on the Internet to “donation and reward” portals like the U.S.-based Kickstarter. On sites like Kickstarter, entrepreneurs can give rewards, such as pre-release products, to financial backers.1 Kickstarter and its U.K. equivalent, CrowdFunder, are examples of how to successfully leverage “the crowd” to raise funds.

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