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Equity Crowdfunding Will Favor Quebec and Quebeckers

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Thu, 18 Apr 2013 11:43:59

Since July, 2012, Invest Crowdfund Québec (ICC-Q) has been spearheading efforts to get equity crowdfunding legalized in Québec. In a recent interview with ICC-Q’s vice-president, Diana Yazidjian, she expressed her conviction that once the Quebec Securities Commission (AMF) legalizes equity crowdfunding, Quebec entrepreneurs, start-ups, and SMEs may obtain access to a much needed new source of funding for up to one million dollars. 

 

"Equity crowdfunding will not only benefit many Quebec SMEs and start-ups, but also let normal Quebecers feel the excitement and satisfaction of sharing in the province’s economic growth."


Invest Crowdfund Québec’s efforts are focused on achieving three main objectives—obtaining government approval for equity crowdfunding, creating greater awareness of and support for this new funding model among entrepreneurs and start-ups, and educating the general public and generating enthusiasm for equity crowdfunding as a means for creating new jobs, businesses, and wealth.

 

Although crowdfunding has been creating a lot of buzz in Canada recently, most of the “crowd” in crowdfunding is largely unaware of what is involved. The idea behind equity crowdfunding is to sell small amounts of equity or investment to many individual (the crowd) and usually non-traditional investors. The crowdfunding model requires the participation of three parties—the person or organization that proposes  an idea or project and requires funding, the many people (the crowd) who are willing to invest funds in support of the project, and the organization (the platform provider) that serves as an intermediary between the project initiator and the crowd.

 

In this model, the soliciting of funds and investors would be carried out on the Internet, something that is currently illegal in Quebec or Canada. For this reason, one of ICC’s immediate goals is to obtain government approval. Evidently, one of the major considerations is how to protect ordinary citizens, who in most cases are not sophisticated investors, from losing their investment either through fraud or as a result of not fully understanding the risks involved. Likewise to be defined is the status of the intermediary organizations or platform providers and the services they will provide.

 

Equity crowdfunding will not only benefit many Quebec SMEs and start-ups with access to previously unavailable funds, but also let Quebeckers who do not have large sums to invest feel the excitement and satisfaction of sharing in the province’s economic growth. Likewise, citizens who own a small share of a local business will be more aware of what Quebec businesses are up to and have an added incentive to “buy Quebec”.

 

Co-Chair, Invest Crowdfund Québec
Diana Yazidjian

To achieve these objectives, Invest Crowdfund Québec regularly participates in public speaking engagements, content generation, all-around networking, think tanks, and professional activities. To this end, Ms. Yazidjian, who has over 15 years of experience in the technology community as a project director, consultant, and speaker, spoke at the first Crowdfund Night Conference held in Montreal in November, 2012, and took the opportunity to elaborate on the many benefits equity crowdfunding offers. She was also pleased to see the growing awareness of this model and answer the many well-focused questions of attendees.


Also in March, Ms. Yazidjian attended the Quebec Securities Commission (AMF) Public Consultation on Equity Crowdfunding. The representatives from many law firms and crowdfunding portals as well as investors and other business stakeholders who were present were encouraged by the AMF’s statements expressing their interest in closely following the changes that are taking place in the United States with the JOBS act. Likewise, modifications affecting the existing OM exemption were seen as an indication that the AMF is headed in the right direction with regards to future modifications that could allow equity crowdfunding.


Important issues that were raised during the session included notion of risk, trust the crowd, a higher investment cap than in the US, protection of investors through social networks, transparency in shareholder agreements, and the status of equity crowdfunding portals. For more details on these and other related crowdfunding news, please visit the following sites:

By Stephen Hanley
shanley@fundica.com



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