- Innovative equity crowdfunding platforms are reducing barriers to raising capital
- Liquid Crowd's unique crowdfunding model is a game-changer for investors
- Investors can now invest in growth-stage businesses they are passionate about while supporting local startups
Being an approved investor in Canada used to mean belonging to an exclusive club where every day was like Christmas. This elite group of individuals, typically with a net worth of $1 million-plus and high incomes, got the first crack at all the neat investment opportunities while the rest of the public were like kids with their noses pressed up against the store window, longing to get in.
Recently, technology has disrupted the way established financial sectors and institutions do business. Fintech firms are changing the way people bank, shifting power away from institutions right to an individual's smartphone. Social media and communications innovations have levelled the playing field allowing small companies to go head-to-head with corporate giants in reaching consumers.
Tech-change is transforming the investment landscape, too. Traditional crowdfunding empowered businesses, non-profits and individuals to raise money from the public using internet and social media-based campaigns. Now, equity crowdfunding allows companies to raise capital and awareness of products and services or meet a financial goal. Thanks to recent changes in equity crowdfunding regulations, the average investor now has access to opportunities that were formerly the exclusive preserve of the approved investor club.
"We're seeing the democratization of capital markets, allowing John Q. Public to invest in a realm that he or she was never able to invest in before. It’s opening up the doors of a game that was only reserved for the top one per cent."
— Tomas Gauthier, Founder and CEO, Liquid Crowd
Liquid Crowd levels the investment playing field
One of the companies helping to equalize investment opportunities for all parties is Liquid Crowd. Headquartered in Montreal, Canada, the company has taken the traditional approach of equity crowdfunding one step further by giving ordinary investors access to private placements that are usually only available to the accredited class.
"We're seeing the democratization of capital markets, allowing John Q. Public to invest in a realm that he or she was never able to invest in before. It’s opening up the doors of a game that was only reserved for the top one per cent," says Liquid Crowd Founder and CEO, Tomas Gauthier.
Liquid Crowd enables startups and companies whose business plan includes an initial public offering (IPO) to raise capital by allowing both accredited and unaccredited investors to participate in a private placement while the company is still private. The company uses recent regulatory changes in several provinces that provide investors access to exciting pre-IPO enterprises.
The company operates as a funding portal under the startup crowdfunding prospectus exemption regulations in Quebec, British Columbia, Manitoba and New Brunswick. Any individual resident of those provinces can invest up to $1,500 per offering in a company raising money under this exemption.
New regulations create a "win-win" for companies and investors
The regulations are proving to be mutually beneficial for investors, startups and other growth-stage companies. Investors can get in on the ground floor of enterprises that they feel strongly about and gain access to their investment sooner. Companies not only acquire much-needed capital, but they can also reach the requisite number of shareholders needed to go public (at least 150) and get listed on exchanges such as the TSX Venture Exchange (TSXV).
When setting up their business model, Liquid Crowd decided to focus on companies that were preparing to go public and needed to reach the minimum shareholder requirements.
"We asked ourselves, 'What do the companies want? What do the investors want?' So, by focusing on companies that were going public, we are addressing both those points," notes Gauthier. “We soon realized that by bringing in these smaller investors, we could help companies meet the minimum shareholder requirements. This quickly became a key aspect of our mission."
Recently, Liquid Crowd helped Auxico Resources, a Montreal-based mining company, reach their minimum shareholder requirement to get listed on the CSE.
"We had raised our initial funding from about 30-40 investors, so we needed a larger number of people. Going the equity crowdfunding route was a very quick and efficient way for us to satisfy the regulatory requirements and we were able to list directly," says Auxico Resources CEO, Mark Billings.
"Companies like ours benefit from what Liquid Crowd does because it gives us another tool in our toolbox. There are times when you need to have a broader base, and equity crowdfunding enables you to do that."
Important safeguards are also in place to protect unaccredited investors. Security regulations limit the amount that can be invested under the crowdfunding exemption to $1,500 per project. Investors who use the Liquid Crowd portal have their investment go into a trust fund for the campaign, not to the company itself. If a campaign doesn't meet its target, they get their investment back.
Liquid Crowd’s platform attracting new investment opportunities
The Liquid Crowd platform recently secured two new opportunities, both in the fast-growing cannabis space. The companies are finalizing their requirements to be listed on a Canadian exchange and both need to garner 150 shareholders.
The first company is ZenaPay Inc., an enterprise software solution provider specializing in cannabis-focused technology for plant tracking, business management, payment solutions, supply-chain management and compliance management.
The second is Organic Medical Growth OMG3 Inc., which has developed and is implementing a unique vertically integrated cannabis production investment model for Colombia. The purpose of this is to empower, purchase, transform, distribute and export the production of multiple licensed producers who own licenses issued by the Colombian governmental authorities to produce cannabis throughout the country.
Both companies have reached their dollar investment goals and are in the home stretch of meeting the required number of shareholders. In the case of OMG3, the company has exceeded its investment funding goal of $10,000 by nearly four times, with a sum of $39,275 raised to date.
Gauthier is particularly excited that Liquid Crowd’s unique platform offers full-circle benefits – giving investors a gateway to get in before promising and innovative Canadian startups go public to support causes and businesses that they’re passionate about and to help generate economic growth in their communities.
"Liquid Crowd creates a modern, cost-effective way to connect Canadian companies with local investors. Companies typically need at least 150 investors to list on a Canadian stock exchange,” says Gauthier. “In light of this, crowdfunding is an attractive and highly effective way not only for companies to raise capital but also to reach the minimum number of shareholders needed to go public."
As Liquid Crowd continues to prove the utility of its model, both growth-stage businesses and the broader investment community stand to benefit. The company’s equity crowdfunding model empowers individuals to seek out worthy investment opportunities that would traditionally be reserved for the top one per cent of investors. In the same light, Liquid Crowd is giving companies access to tremendous capital raising opportunities, while expediting the public listing process.
To learn more about how Liquid Crowd is transforming how people can invest, visit them online: https://liquidcrowd.ca/