Canada based Crowd Capital has signed an agreement with SeedUps to launch an investment crowdfunding platform where ordinary investors may invest in listed companies. As part of the new agreement, the company will now be branded as SeedUps Canada. Crowd Capital is part of the Exempt Capital Network (ECN).
Crowd Capital Inc. signs Agreement with SeedUps (IRE) Ltd., a leading brand in crowd financing. Announces worldwide strategic partnership with Exempt Capital Network Inc.
Using “intelligent” equity crowdfunding technologies developed by SeedUps, and compliance functionality developed by ECN, SeedUps Canada will be a “first-mover” in the Canadian marketplace. The company plans to present private placements to investors that have between $1K and $50K they wish to invest in Canadian entrepreneurs with early stage businesses. SeedUps Canada’s issuers will offer their securities through current exemptions defined in National Instrument 45-106, Prospectus Exemptions and Regulations and its companion Blanket Order 45-512.
“We have looked at, and met with, most of the leading equity crowdfunding portals around the world,” states Sandi Gilbert, Crowd Capital’s CEO, “we believe the SeedUp’s technology and ECN’s compliance functionality to be among the best there is. As a result, we have selected them as our worldwide partners.”
The SeedUps Canada crowdfund investing platform will facilitate capital raises for early stage companies seeking between$250,000 and $2 million in capital and will be accepting investor registration and business proposals immediately. The Company expects to launch with live offerings in November under applicable securities regulations and compliance.
The SeedUps technology has unique capabilities that will interest both the investor and the issuer. Valuations for early stage companies are often hard to determine and in some instances, the company is not successful in raising capital because potential investors, even though they want to invest, feel the valuation is not right. SeedUps proprietary algorithms and patent-pending process allows investors willing to invest a minimum amount (say $10,000), to place a bid at a lower valuation, which the Company can accept or reject. If they accept, all investors receive the same valuation price and the company closes the deal. Investors are engaged in the capital raise process and issuers receive valuable feedback on their investment pitches.
“SeedUps valuation technology has its basis in technology developed in another of my business interests, a peer to peer currency platform EuroXchanger,” says Michael Faulkner, SeedUps CEO. “The Company, founded in 2002, filed patents on its technology in 2003. SeedUps used base assumptions of fair market pricing and market dynamics to create its own Patent pending technology. We believe company valuation is the efficiency mechanism required to allow equity crowdfunding to scale into a multi-billion dollar industry in the US, Canada and Europe.”
The SeedUps partnership is an extension of the original ECN / Crowd Capital vision. ECN and the new SeedUps Canada operate in different, but complementary stages of an Issuers’ capital raise cycle. SeedUps Canada helps in early stage financings, while ECN typically facilitates capital raises for more established companies.
“ECN receives many quality business proposals from early stage companies,” notes Neal Gledhil, ECN’s CEO. “Although many of these companies are a sound investment opportunity, they do not require enough capital to reach out to high-net worth individuals and institutions – the very market ECN serves.”
In these cases, the opportunity will be turned over to SeedUps Canada, complete with due diligence and validation for posting on the platform.
“Additionally, many of the Issuers that raise capital through ECN may want to offer their securities to ordinary investors and may choose to do simultaneous offerings on both platforms,” continues Gledhil. “This is an ideal environment whereby the Crowd will have the opportunity to participate in investments alongside more seasoned investors and invest in deals they would not otherwise have access to.”
There are no defined rules for crowdfund investing (CFI) in Canadian securities regulations today; therefore the CFI market has not yet evolved in Canada as it has in other Global jurisdictions. At initial launch, SeedUps Canada’s issuers will offer their securities through current prospectus exemptions available in Canada. The Ontario Securities Commission (OSC) recently issued a progress report on their review of these exemptions to facilitate capital raising (OSC Progress Report) and we are encouraged that they are contemplating the development of an OM exemption in line with Alberta’s so we can expand opportunities to non-accredited investors in Ontario. In order to comply with securities requirements inherent in today’s Exempt Market, we have partnered with ECN to utilize its compliance functionality to efficiently manage our processes, all the while advocating for a review of compliance requirements for small investments.
Securities regulators are reviewing new exemptions to address the needs of businesses raising smaller amounts of capital through equity Crowdfund investing platforms like SeedUps Canada. These regulations are expected to reduce regulatory compliance making it easier for small businesses to raise capital and investors to find early stage investment opportunities. “The momentum is in our favour,” states Sandi Gilbert, “and we expect to see more changes in the coming months. When and if these changes happen, we’ll be ready to expand the platform to support true Crowdfunding.”
“For now,” adds Gilbert, “It’s great to be on the move. We can’t wait to help Canadian entrepreneurs’ access the capital they need to grow and prosper and we know there are many Canadian investors who want to support these entrepreneurial efforts.”
SeedUps is currently listed on the ECN platform as raising $750,000 in equity. The offering is available for registered investors.