Crowdfunding – Introduction

As discussed in our previous blog post, “Private Placements in Canada”, Canadian Securities regulations generally restrict a company from selling its securities without filing a prospectus, with the applicable securities regulator(s). This requirement can be prohibitive to early stage businesses, due to cost.

With the introduction of BC Instrument 45-535 Start-up Crowdfunding Registration and Prospectus Exemptions in 2015, as amended in 2017, certain companies can now raise money through selling their securities to investors online, in exchange for investments. The crowdfunding exemption permits companies to raise up to $250,000.00 during a maximum 90-day offering period.

If your company has a head office located in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick or Nova Scotia, your company may be able to rely on the crowdfunding prospectus exemption.


A benefit of crowdfunding, as opposed to raising funds pursuant to other prospectus exemptions, is that it allows a company to raise funds from a diverse range of people. Whereas, several of the other Canadian prospectus exemptions, restrict investors to family, friends or business associates. Through relying on the crowdfunding exemption, companies can reach beyond their close family/friends network and sell securities to other investors who may have interest in their business, or belief in their product.

Generally, the crowdfunding exemption permits investors to invest up to $1,500.00. However, as of September 2017, this amount can be increased to $5,000.00 per investor if:

  • the investor resides in British Columbia or Alberta;
  • the issuer has a head office in British Columbia or Alberta;
  • the start-up crowdfunding distribution is made through a registered dealer; and
  • the dealer has determined that the investment is suitable for the investor.


 There are several considerations for a company before engaging in crowdfunding. During the planning stage a company must determine the type, class and kind of securities that it will sell in exchange for investments, as well as the price that it will sell such securities for. In determining these factors, there are many considerations for the company including how much money it would like to raise and how many security holders it wishes to have.

A company must also decide which online crowdfunding portal it will use. Pursuant to securities laws in BC, a crowdfunding portal must be registered as a dealer, unless such portal relies on an exemption to register as a dealer. If a company’s goal is to raise a large amount of money but wishes to keep the number of security holders to a minimum, then it should consider using a registered crowdfunding portal, which permit investments of $5,000.00 per investor, whereas the maximum through an unregistered dealer is $1,500.00 per investor.

The British Columbia Securities Commission has set out the following crowdfunding portals, which are permitted to operate in BC:

Name of Portal Registration Status Website
CanaDragon Enterprise Equity Crowdfunding Interchange Exempt
Consider Funding Exempt
FrontFundr Registered as a dealer
GoTroo Exempt
InvestLocalBC Exempt
Liquidcrowd Exempt
RealStarter Exempt
StellaNova Exempt
Vested Exempt
Wayblaze Crowdfunding Inc. Exempt



Once the above detail has been confirmed, a company must prepare an offering document. The offering document must describe the business, set out the minimum amount the company wishes to raise, the securities details discussed above and other detail. The offering document will be posted on the crowdfunding portal’s website, for potential investors to review and confirm they have read before investing.

The crowdfunding portal will hold the money contributed by investors of the company through the portal, in trust for such investors until the minimum amount that the company has specified in its offering memorandum, is raised.

If the company does not reach the minimum amount investment in the 90-day maximum offering period, each investor will get their money back.

Once the crowdfunding portal holds the minimum amount, the company can either close the crowdfunding or, if the 90-day maximum offering period has not expired, can continue to raise funds, provided the offering document set out what the company will do with funds raised over the minimum amount.

When the minimum amount has been met and the company would like to close the crowdfunding, investors will have a 48-hour period to withdraw their investments, if desired. Following this period, the crowdfunding portal will release the money raised to the company and the company will issue the relevant securities to the investors.

Following the closing of the distribution, an issuer will have several filing and disclosure obligations including to relevant securities commissions and to investors.

For more information about the crowdfunding exemption, or for assistance with determining whether you qualify for the exemption, preparing an offering document, or your post closing reporting responsibilities, please contact our firm at (604) 688-4900, or email one of our lawyers at or