Crowdfunding in Canada

Crowdfunding is part of a wave transforming the funding models available to startup entrepreneurs.

In Canada news includes two models for equity crowdfunding.

  • Crowdfunding Launches in Canada – CBC News
  • Why Crowdfunding Has The Potential To Be Incredibly Disruptive In Canada – TechVibes
  • Crowdfunding in Canada: Hurdles and Opportunities – TechVibes
  • The Pros and Cons of Crowdfunding – CBC News
  • iFundWaterloo is pioneering a local community oriented Crowdfunding project, working with the mayor of Waterloo
  • i-Canada Crowdfunding initiative

Crowdfunding – Overview

There are numerous high quality resources on the web that explain Crowdfunding – We have sampled a few of these to provide a snapshot executive guide. A good combination to read that we recommend is:

In short the first one provides a detailed introduction to the principles of Crowdfunding, and then the second two provide examples of how these can be applied on two of the possible web sites that you can use. There are many others however these three will cover:

  • How Crowdfunding is currently mainly about a ‘Rewards’ based model, meaning that it’s not so much investors but rather keen first customers, willing to pay their money up front as a form of seed capital so they can obtain the product. The most popular site for this approach is Kickstarter.
  • Equity funding is more challenging due to the perceived legal and financial risks, but is now legal in the UK, Australia and elsewhere, with the JOBS Act making it so in the USA too.
  • Best practices for successful projects: What funding amounts work best, how long to run projects for (40 day campaigns are most successful).

The CFAC (Crowdfunding Association of Canada) offers this 101 Introductory Guide.

Reward Based Models

Crowdfunding is so powerful because it encourages entrepreneurs to follow good practices for launching their venture, such as engaging customers into the design process right from the start,  very early. The popular sites like Indiegogo offer tools like Perks to tailor benefits and incentives for your early subscribers, and viral tools like referral contests.

Adam recommends leveraging social media to grow an early fan base, indeed there is a critically important relationship between Crowdfunding and social media. In short it is the ideal toolset to build an initial fan base, through encouraging the use of ‘likes’ and other features now so common to most people’s working lives.

He suggests some practical % conversion rates for prospect lists you might have like email lists or Twitter followers; in general every crowdfund project needs to think about the same marketing and business plan dynamics as any startup.

 

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