MaRS Library Crowdfunding
Crowdfunding is a form of crowdsourcing, but the terms are not interchangeable. Crowdfunding uses online platforms to reach potential supporters and customers, raising funds for projects or businesses through donation, incentivized gifts or rewards, micro-lending or equity-based financing. It should be noted that within Canada, equity-based crowdfunding is in a legal grey area.
This resource contains the following sections:
Visit the Startup Library page Digital gaming I. Business of digital games for resources on crowdfunding as it relates to the video game industry.
I. Crowdfunding Resources
In this section you will find resources including tutorials and guides, tips and tricks, industry general practices and analytical tools, all related to crowdfunding.
Crowdfunding in a Canadian Context (CMF, 2012) (PDF): This document provides an overview of the crowdfunding market in Canada. The report includes descriptions and case studies of various crowdfunding models, including donation, lending and investment.
It also provides market trends within the US, Europe and Canada, and specific information on crowdfunding in the digital media industries.
Crowdfunding Market Report (Crowd Valley, 2013): This free report (registration required) includes facts and figures (for example, percentages on investment models, client types and regions) on the growing crowdfunding market, a comparison of crowdfunding models (equity versus lending, and so on), asset types, client profiles and geographical comparisons.
Harness the Crowd (HTC): HTC is an online community portal that promotes crowdfunding practices through education and by connecting individuals with the resources and services that will help them meet their crowdfunding goals. Featured resources include e-books, white papers, articles and videos that cover topics including public relations and marketing, video production, idea development and running a campaign.
HTC also provides links to services that will help startups with their crowdfunding campaigns.
Is Crowdfunding Right For You? (India Innovation Institute, 2013) (PDF): This report provides an introduction to crowdfunding for those new to the practice. It covers definitions, legal implications, implementing strategies and case studies.
Life after Kickstarter: 5 Costly Lessons from a Kickstarter-Backed Designer (Fast Company, 2013): This article highlights a case of a successful Kickstarter campaign that hit many roadblocks after funding was acquired. The startup had to deal with everything from arranging manufacturing in foreign countries, learning international tax law and pleasing its initial group of backers. With crowdfunding, the work doesn’t end after a successful campaign—it’s only just beginning.
National Crowdfunding Association of Canada (NCFA Canada): The NCFA Canada was formed in 2012, in response to the growing popularity of online crowdfunding. This non-profit association is dedicated to educating businesses, creating networks, performing research and providing a forum for the crowdfunding industry within Canada. Of particular interest is their support of equity-based crowdfunding legislation in Canada, which they promote through a variety of initiatives. Also on their website you can find a directory of Canadian crowdfunding platforms, portals and providers, crowdfunding event listings, resources and links and research. NCFA Canada also highlights information about Canadian crowdfunding campaigns, for example, with this summary of national survey results.
The Crowdfunding Bible: Published by the consulting firm TechSavvy, The Crowdfunding Bible is a guide for entrepreneurs who would like to start a crowdfunding campaign. It provides useful tips on marketing a project (for example, with a public relations campaign, video production, perks and rewards for contributors), potential risks, profiles on various crowdfunding portals and interviews with startups that had unique or successful crowdfunding experiences.
Crowdfunding Analytics Tools
Crowdlogs: This tool creates visualizations of Kickstarter, indiegogo, Patreon, and Subbable project campaigns and their progress over time. Viewers can use these graphs to predict what values successful projects share and what commonalities exist between failed projects.
Kicktraq: This Kickstarter analytics website not only tracks the progress of Kickstarter projects, but also creates projections for those projects with a series of graphs. The website also provides news, trends and success stories within the crowdfunding industry.
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II. Equity-Based Crowdfunding in Canada
Crowdfunding for equity—that is, the practice of small companies providing equity in exchange for financial backing—is not yet legal in Canada, but is being explored across the country by various provincial securities regulators. Outside Canada, specifically in the UK, crowdfunding of equity and debt is possible; much of the experience and many of the best practices seem to emerge from Europe. Meanwhile, the Securities and Exchange Commission (SEC) is in the process of implementing crowdfunding rules to enable equity-based crowdfunding in the US. For more information on the issue of equity crowdfunding, please refer to some of the following resources.
OSC Exempt Market Review (Ontario Securities Commission [OSC], 2012) (PDF): This staff report from the OSC identifies key regulatory aspects of equity-based crowdfunding and forms the basis for the public consultation process that the OSC is currently undertaking.
Accelerating Crowdfunding in Canada (Helix Commerce International Inc. 2012) (PDF): This report provides background on the ambiguity surrounding equity crowdfunding in Canada. It examines the Canadian crowdfunding landscape, the global context, various success stories, the current state of legislation in Canada and a primer on the US Jumpstart Our Business Startups (JOBS) Act.
NOTE: In April 2012, President Obama signed the Jumpstart Our Business Startups Act into law, ensuring that small businesses can participate in equity-based crowdfunding. Although the majority of the JOBS Act has passed into law, certain provisions of the act are still pending, and are awaiting approval by the SEC, which is in the process of formalizing rules for equity crowdfunding. However, the precedents set in the US and UK do not necessarily reflect crowdfunding reality in Canada. Davis LLP, a business law firm with expertise in securities law, predicts there are many factors that could confound equity-based crowdfunding in Canada. In their online article Equity-Based Crowdfunding: Coming to a Province Near You? (2013), Davis LLP asks whether provincial securities commissions can develop a workable, secure and efficient framework to minimize fraud and regulatory burdens. The article also points to Canada’s smaller relative markets—they are not as robust as markets in the US or UK, with smaller industrial and technology sectors—and questions the level of interest in the crowdfunding model from Canada’s smaller pool of potential investors.
III. Tracking the Latest Developments in Crowdfunding
Look to these resources for up-to-date news and information regarding the crowdsourcing industry.
Although these blogs are published by crowdsourcing platform providers, they concentrate more on providing general crowdfunding information and advice rather than promoting their own products.
Crowd Valley News: Crowd Valley provides their customers with an online infrastructure to create their own crowdfunding portal, mainly in the securities, real estate, energy and financing sectors. The Crowd Valley company news provides crowdfunding news, analysis and anecdotal information related to these sectors.
CrowdFundBeat: This website provides readers with the latest news regarding the crowdfunding industry in Canada and internationally. Topics include crowdfunding in various industries, ongoing issues of securities and tax regulations, and success stories and trends. Video reports and event listings also feature prominently on the site. Also be sure to visit the US sister site, also called CrowdFundBeat, which mainly covers issues related to crowdfunding in the US but also has an international focus.
SVCrowdFund Conference & Expo: The SVCrowdFund Conference & Expo features experts in the venture capital, business angel and crowdfunding fields. Attendees can attend panel discussions, networking events and workshops to discuss the current state of the crowdfunding industry. Exhibitors include platform/software companies, crowdfunding media sites and investors. The conference is located in Palo Alto, CA.
Crowdsourcing Week: Crowdsourcing Week organizes an international industry conference as well as crowdsourcing events in London, Shanghai and Singapore in order to “help organizations transition into a more open, connected, and socially productive society.” Their program includes industry leading speakers and networking events.
Twitter is a great way to track industry trends and keep up to date with developments and issues within the crowdfunding industry. We recommend following these key handles: @Seedups, @svcrowdfundnews, @crowdfundinside, and @CreativeSocial.
- Taking your Series A pitch on the road: Are you ready for prime time?.
- Buyer motivation: What moves your target customers to purchase your product?.
- Debt financing: Angel investors, leasing companies, venture debt funds and more.
- Financing workbook 2: The business plan and executive summary.
- Exit strategy planning: IPOs, mergers and acquisitions and licensing.