Minister Brad Duguid announced today that the Ontario Securities Commission is working to find a way to allow non-registered investors to fund startup firms.
Speaking at Technicity, the Toronto-based event co-hosted by IT World Canada and the City of Toronto, Duguid said Ontario needed to adopt crowdfunding so it wouldn’t lose entrepreneurs to south of the border. He confirmed a Globe and Mail report that the Ontario Securities Commission is contemplating a crowdfunding exemption to the Securities Act.
“I believe it’s absolutely imperative that we keep pace with the U.S. on this,” Duguid said. “We have to make sure we’re nimble enough that when the U.S. moves on this we’re ready to go… and I’d have no problem getting ahead of them on this either.”
Equity-based crowdfunding would allow non-registered investors to buy small amounts of equity from early-stage firms looking to raise money. Advocacy movement Invest Crowdfund Canada (ICC) has been selling the idea as a way for entrepreneurs unable to find funding from angels or venture capitalists. In the U.S., President Barack Obama endorsed and then signed the JOBS Act into law, setting the stage for the SEC to implement regulations that would legalize equity-based crowdfunding there next year.
But in Canada, there is no national regulator and each province’s securities regulators must examine the crowdfunding issue.
Duguid was impressed by entrepreneur Eric Migicovsky’s success on Kickstarter, a perks-based crowdfunding platform in the U.S. It allowed him to raise $10 million for his smart watch product Pebble. Migicovsky, an Ontarian and graduate from the University of Waterloo, took his business to Silicon Valley to pursue funding opportunities when he couldn’t land any capital in Canada.
“Venture capital funding still remians a challenge here in Canada, here in Ontario,” Duguid says. “Game changing models like crowdfunding are going to allow Ontarians to drive entrepreneurs forward.”