Q.What is Crowdfunding
A.Crowdfunding is the raising of funds through the collection of small investments from the general public “the crowd” utilizing the Internet and social media channels as conduits.
- Crowdfunding – small amounts from numerous groups or individuals
- Equity Crowdfunding – the sale of a stake in a business to a large number of investors in return for equity in the company
A.Start-up or early-stage businesses can raise money for their operations by selling securities (such as warrants and common shares) to investors through a start-up crowdfunding campaign. If you contribute, you are an investor and hope to share in the future success of that business.
Q.Can Anyone Invest in a Start-Up Crowdfunding Campaign?
A.You must reside in a jurisdiction that allows companies to use an exemption to sell securities to investors through start-up crowdfunding, such as British Columbia for Launch Portal. It is up to you to protect your own interests by knowing what exemption the company is using to sell you its securities.
Q.How Much Can You Invest?
A.Get started for as little as $50 or invest up to the maximum $1500 per person.
Q.What Risks do These Types of Opportunities Have?
A.Before you invest, the funding portal will ask you to confirm that you have read and understood the risk warnings and the offering document. These investments are risky and you could lose your entire investment.
Q.What are the Expected Types of Returns?
A.Returns are always uncertain and depend on many factors beyond the company’s and your control. The majority of start-up and early-stage companies never go public. If the company you invest in never goes public, then you may never be able to sell your shares. That’s what makes it so risky and why you should only invest in a private company using crowdfunding if you can afford to lose your whole investment.