U.S. startups shop for best crowdfunding platforms

While the effort to get equity-based crowdfunding  legalized is making headway in several provinces across Canada, American startups are already sizing up what platform they’ll be using to raise money.

The U.S. passed the JOBS Act into law last April, making it legal for non-accredited investors to own a small share in startup businesses seeking funding. It’s viewed as an alternative way for entrepreneurs to find cash when they are passed over by venture capitalists and angel investors. The crowd-funding option comes into effect in January 2013 south of the border.

Now the U.S. has seen no less than 500 crowdfunding platforms spring up to serve startups who’ll be looking to tap that new funding mechanism. Similar to sites like Kickstarter or Indiegogo, these sites promise investors direct ownership in the firms they’re giving money too, not just a future product release or promotional T-shirt.

A survey by EarlyShares, one of the equity-based crowdfunding sites that has been launched, shows that about one-third of U.S. startups will look to use the most visible platforms, while another one-third will look to industry-specific platforms.

A group called the i-Canada Alliance is working towards legalizing equity-based crowdfunding in Canada. It has started a petition, written an open letter to the minister of industry, and is in discussions with security regulators and politicians across the country.

IT World Canada’s Technicity event, taking place Nov. 29 in Toronto, will focus on the topic of crowdfunding in Canada.

Source | EarlyShares

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