Canada’s stingy Venture Capital scene is due for a crowdfunding shake-up

Your average Ontarian may soon be able to invest in a stranger’s private company. How scandalous!

Canada wants startups. Each province begs entrepreneurs to launch tech companies on their soil through tax breaks, grants, mentorship programs, “incubators” and “accelerators.” What they can’t offer is capital.

Canada doesn’t have a lot of venture capital firms, and the VCs we do have are known for being fickle, thrifty, conservative and nervous.  Compare that to Silicon Valley, where the hot strategy is to throw caution to the wind, seeding dozens of ideas with a little bit of cash instead of pumping millions of dollars into a few cherry-picked concepts. No wonder why our best developers head down south to launch their ideas.

There’s no way for government to suddenly compel an investment firm to loosen up and grow a pair, but there is one thing legislators can do to turn the VC tap on: legalize equity crowdfunding. If any Canadian could buy a small piece of a nascent startup, hundreds of millions of dollars in private capital might be quickly released into our startup ecosystem. Last week, Brad Duguid, Ontario’s Minister of Economic Development and Innovation, announced his intention to make it happen…..eventually. Current securities regulations (throughout Canada) prevent private companies from soliciting funding from (non-wealthy) individuals, as these companies aren’t subject to the same scrutiny as publicly traded companies. Equity crowdfunding will require exemptions from these laws, province by province. In Ontario, Minister Duguid promises a consultation document on the issue early next year. Actual implementation could take years.

Until then, if you live in Ontario (and you are not a millionaire), here are some investment options: you can gamble all of your money on the stock market and you can gamble all of your money on a business launched by a friend or family member. But you cannot buy a $100 stake in a company launched by a stranger with an amazing idea. It’s for your own good.

Follow Jesse on Twitter @JesseBrown




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Canada’s stingy Venture Capital scene is due for a crowdfunding shake-up

  1. ‘It’s for your own good.’

    Mmm, everytime I hear that phrase I know that it’s someone else’s morality being imposed on me.

  2. Great article, but this trend is hardly new. Corporate Canada’s retardation has been damaging this country for decades. Eaton’s could be H&M right now, if it had ever really invested in Canadian creativity. Instead, corporate leaders openly loath their fellow citizens.

    In fairness, it goes beyond a lack of venture capital. The provinces could do so much more. Office space remains a rip off across the country. It’s as simple as providing low-cost/no-cost community spaces where we people can come together, and co-learn the technology.

    But a total mindshift is required, and the change will take decades. Canada is widely considered a lost cause at this point, a good place to leave. But I’d love to be proven wrong. It would take a miracle.

  3. Tax creditsay be a more sound starting point. It’s working in BC!

    • how so? Can you provide a link to more info? I’d be interested, thanks!

  4. Everyone with Godly morals is leaving Canada and the USA, as they don’t want to stay and be forced to fund genocide upon the preborn, and be forced to accept and fund sinful perversions and brainwashing upon families and children. Canada and the USA are cursed by God, get out while you still can to one of the last few refuge countries that exist which stand for life and freedom of conscience

  5. Throwing caution to the wind hasn’t necessarily worked out incredibly well for VCs in the USA. Of course we here about the outliers that gather big headlines, but if you look at the broader industry things aren’t going quite as well as we’d think based on anecdotal evidence. Many of these startups being haphazardly funded are not panning out very well:

    http://pandodaily.com/2012/11/28/the-series-a-crunch-is-hitting-now-have-we-even-noticed/

  6. D,the U.S. and Canada are cursed by religious fanatics like you!!!

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