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Subject: Equity Crowdfunding: Creating a new Venture Finance Market
(Posted on Jun 23, 2014 at 09:10PM by Peter Paul )
Equity Crowdfunding: Creating a new Venture Finance Market

On May 29th, the Equity Crowd Funding Alliance (Canada),the ECFA hosted the 2014 Equity Crowdfunding Event in Vancouver of which I was honoured to be the lead-organizer.

It was a lively and interactive event where attendants learned more and shared their thoughts about equity crowdfunding and its potential to contribute to a healthy venture finance market place in Canada. One that connects startups and small and medium enterprises with the larger investor community, creates jobs and economic growth.

The event was also an opportunity to gain a better understanding of how equity crowdfunding is fundamentally different to other forms of crowdfunding, such as donations and rewards, in that equity crowdfunding is subject to securities legislation. While often referred to as 'equity' crowdfunding, it is actually not only equity, i.e. shares, but may also be debt notes, convertible notes and hybrid forms of equity/debt, even partnership units qualify as security. Opinions on the level of regulation may differ, but evidenced by recent proposals on crowdfunding, the regulators across Canada recognize the importance of investment crowdfunding and want to ensure they are standing on the right side of progress.

Investment crowdfunding has the potential to fundamentally reshape the venture finance space. But: all participants must fully understand the risks & rewards (potential returns) which can only be realized through an educational and transparent crowdfunding environment.

The conference also included a panel discussion with Angels & VCs. There is an important role for the existing investors in venture financing. Equity crowdfunding will not replace Angels and VCs. On the contrary, Angels and VCs are vital in building a healthy and sustainable equity crowdfunding environment. It will be a symbiotic relationship.

There seems to be increasing consensus that equity crowdfunding is not just the latest hype but a trend, an emerging industry still in its infancy. It is an alternative for funding companies and projects via and with the aid of modern internet technologies. It will increasingly go viral and become established driven by the accelerating penetration of the digital economy.

For more highlights of the event:

Democratizing Investing: Canada's Emerging Equity Crowdfunding Landscape

Crowdfunding Experts Interview with Brian Koscak, Co-Chair ECFA Canada