The escalator guiding ambitious entrepreneurs up the crowdfunding ascent toward meaningful capitalization according to the unique requirements that characterize different stages of their evolution makes its next stop at the Offering Memorandum exemption.

Like the other exemptions under current consideration by Canada’s provincial regulators who are trying to assign parameters to crowdfunding legislation in this country, the Offering Memorandum exemption introduces a means of raising funds for Canadian startups in a way that gives the most amount of protection for investors and the least amount of cost and hassle for recipients.

exemptLike the existing model that’s been available for a long while in most Canadian jurisdictions outside of Ontario, this proposed exemption is remarkable for the absence of limits it imposes on its fundraising abilities.

At the same time, however, this exemption — which is kind of like a baby IPO — distinguishes itself with a few more hoops for jumping through than those called for in proposed crowdfunding exemptions designed to cater to companies in earlier stages of their lives.

Among them: an obligation that the fund-seeking company put together a fairly detailed self-description and abide by a requirement for a detailed level of disclosure. In addition, audited financial statements are called for beyond a certain level of money raised. While there are no restrictions imposed on the issuer, there’s a $10,000 limit for individual investors unless they obtain suitability advice. More than that, investors taking advantage of this exemption are required to sign a risk acknowledgement form.

While the Offering Memorandum exemption has been available in most of Canada for some time, few companies have yet to take advantage of it. Speculation abounds, however, on whether it will attract more attention and usage as the corporate world turns its focus on the other crowdfunding exemptions under consideration.

9 Canadian provinces have proposed exemption to allow equity crowdfunding in Canada. Find out which provinces and how are the exemptions different. To find more, visit here.

Equity Canada (2)

The next step up the escalator on corporate Canada’s meaningful ascent along it is an exemption aimed at small companies in the early part of their lives.

The so-called “startup exemption” — one among several under consideration by provincial regulators charged with defining crowdfunding legislation in this country — is designed to help operations that don’t have a lot of capital requirements, but who need a financial jolt to get them to the next stage.

startupsignThis exemption, already in place in Saskatchewan, is part of the plan proposed by provincial regulators in late March that would allow crowdfunding to take place in a more cost-effective and regulated environment. Under it, small and early-stage companies would be freed from a regime that many consider too expensive relative to the amount of capital they’re seeking.

Here, organizations would be allowed to raise up to $150,000 twice a year by issuing securities to non-accredited investors without having to present a prospectus — provided they meet certain conditions.

This development would reduce some of the hurdles companies would otherwise have to navigate, and the attendant expenses associated therewith. Money raised via the startup exemption would not require audited financial statements. And there would be no need to involve lawyers to draft massive documents on startups’ behalf, given that they can undertake the stripped-down application process themselves. The point, of course, is if you’re raising $150,000 and have to spend $50,000 of it on legal fees, well, you’re defeating the effort.

Moreover, the portals that facilitate the deals would be released from the burden of performing a vast quantity of due diligence on the startup. The portal needs only present the deal for consideration, has no call to provide investment advice and is not held liable if something goes wrong.

The various provincial regulators are seeking comments on this and other proposed crowdfunding exemptions until June 18.

You can register your interest today and be among the first to participate in securities crowdfunding for your business, or as an investor in someone else’s, via the equity crowdfunding available through FundRazr.

2014 Funding Roadshow Crowdfunding Competition Launches April 9th

by Tatyana Kapkan 9 April 2014

Introducing The Fundees Awards – 2 Grand Prizes worth $10,000 + More Montreal/Vancouver: Two of Canada’s most successful funding platforms, Fundica and FundRazr, have teamed up to add an exciting crowdfunding layer to the 2014 Funding Roadshow. The Fundees Crowdfunding Competition, powered by FundRazr, will be unveiled at the Toronto and Guelph Funding Roadshow events […]

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Friends, Family, Associates Exemption Holds Promise

by Laura Pratt 3 April 2014

It’s a time of upheaval and adjustment in the land of crowdfunding, meaning vigilance and attention to detail are called for if your average soul harbours any hopes of staying on top of an increasingly complicated subject. Take, for instance, the business of the exemptions recently proposed by the Ontario Securities Commission regarding capital raised […]

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Heartbreaking Film “Our Father” Funded On The Crowdfunder Show

by Tatyana Kapkan 2 April 2014

“One life is all we have and we live it as we believe in living it. But to sacrifice what you are and to live without belief, that is a fate more terrible than dying.” – Joan of Arc. Linda Palmer wrote a heartbreaking personal story about secrets of her estranged father who left the […]

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Tragedy at SXSW: Jamie and Evan West

by Tatyana Kapkan 28 March 2014

The South by Southwest festival draws thousands to enjoy the music, film and interactive conference each year in Austin, Texas. Austin’s downtown streets fill with people moving between bars in order to listen to bands and artists performance. This year a terrible tragedy occurred on March 13th, when a drunk 21-year-old driver was trying to […]

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Provinces Take Steps With Crowdfunding Regulation Proposals

by Laura Pratt 28 March 2014

The first day of spring this year bloomed in the company of a miscellany of new regulations governing the crowdfunding frontier. While it would be significantly more convenient if Canada acted as a uniform entity in its oversight of this still Wild West-like landscape, the provinces insist on unique approaches. Here’s an overview: • In […]

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How To Get Your Crowdfunding Campaign News Coverage

by Tatyana Kapkan 27 March 2014

Campaigns that receive news coverage (online and offline) raise 2 to 3 times more than campaigns that don’t. Examples of campaigns that had news coverage include the Matt Scarff campaign (which raised a whopping $107,000), Aid for Orly (coming in at $70,000) and the Help Mama Jade campaign (brought in over $28,000). All of these […]

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Rob Knight at TED2014: Microbes in Your Gut Define You as Much as Your Genes

by Tatyana Kapkan 21 March 2014

At TED 2014 in Vancouver, microbial ecologist Rob Knight talked about the ecosystem of microbes within our bodies, and it’s potential for causing or curing diseases. Rob Knight and his team have launched the American Gut, the world’s largest open-source science project to understand the microbial diversity of human gut. It’s one of the most […]

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