Residents of BC, AB, SK, MB, ON, QC, NS and NB, over the age of 18, may currently be eligible to invest through FrontFundr. Your ability to invest in a specific company depends on the location of the company’s headquarters, and the securities law in each province.
Each campaign will indicate which provinces the company may accept investments from - in the information bar on the right hand side of their campaign page. For more information on investor eligibility, please visit our Regulation page.
Investment limits are dependant on your province of residence, financial standing and relationship with the company. Your investment limit is calculated on the first page of the investment process, after clicking ‘Invest Now’ on a company in Live Campaigns.
Before investing you should always understand the risks involved and be sure that the investment aligns with your personal and financial circumstances, your overall tolerance for risk and your goals. FrontFundr will always conduct a suitability analysis of your proposed investment based on your investor profile, which you will be asked to complete for your first investment and confirm that it is up-to-date for any subsequent investments. This is done in accordance with Canadian securities regulation. If your investment is deemed suitable, FrontFundr will send you the investment documents for you to sign. If your investment is deemed unsuitable, FrontFundr will contact you to outline the options available to you.
It is important to make an informed investment decision. That is why each company provides an introductory video, their business and investment highlights, and an introduction to their team. Often, a company will also make an offering document available in the ‘Documents’ tab of the campaign page. The offering document is an in depth look into the business; including a look at the applicable risks and the use of funds raised. It is also wise to do your own internet research on the company’s business and industry.
FrontFundr conducts a comprehensive analysis of each company before allowing them to raise capital through the FrontFundr platform. This is done to eliminate surprises and create transparency for investors, as well as test or challenge a company’s valuation to help ensure that the investor is getting a fair deal. Among other efforts, FrontFundr’s approach consists of document analysis, management interviews, financial statement analysis, background checks and an assessment of the investment opportunity and the associated risks. The final step of the analysis process is a formal review by FrontFundr’s Investment Review Committee of sophisticated investors, industry experts and respected members of the Finance Industry. Through this stringent vetting process we aim to give investors confidence in their investment decision and mitigate any risks that we believe an investor should not be exposed to. Such risks include, the lack of proper corporate documentation, poor preparation, and the lack of a competent team. That being said, it is important to understand that any investment will carry risks and it is our aim to disclose all risks to investors.
The private capital market allows companies to raise capital without going through the lengthy and expensive process of preparing a prospectus (A prospectus is an extensive offering document used by public companies to provide details about their business, financial situation and the investment opportunity). This allows early-stage and growth companies to expand their business with quick and easy access to capital, and it gives investors the opportunity to become an owner in the business while the valuation of the company is still relatively low. Unlike the public markets, shares in private companies can not easily be sold or exchanged for cash. Therefore, long holding periods are expected before an investor can sell their investment. Due to the volatile nature of early-stage businesses, their shares are considered high risk investments. It is important to note the relationship between risk and return - ‘the higher the risk of an investment, the higher the potential return’.
Traditional Crowdfunding uses a donation, pre-order or rewards model to raise capital from the ‘crowd’. Equity Crowdfunding differs slightly, by giving the investor an ownership percentage of the company - to share in any profits and success of the company as it grows. FrontFundr has now introduced the option of a hybrid between the equity and rewards models of crowdfunding, where you can become an owner of a company and also receive a gift in exchange for your investment. FrontFundr is also exploring other types of ‘Investment Crowdfunding’ to help investors diversify their portfolio.
Typically there are three ways in which you may see a return on your investment: 1) The company is acquired by another company, at which point you would sell your shares; 2) The company goes public on a stock exchange, at which point you may sell your shares on the open market; Or 3) The company generates excess cash and decides to issue dividends to their shareholders.The companies 'Offering Document' and 'Shareholders Agreement' will outline any specific sale restrictions on your shares.
- Risk of Loss - Investments in private companies are generally high risk investments, there is the chance that you may lose your entire investment.
- Liquidity Risk - There is currently no marketplace in which to sell shares in private companies freely. There is the possibility that you will never be able to sell your shares.
- Lack of Information - Although we urge companies to keep their shareholders updated on a regular basis, there is no legal requirement for companies to provide ongoing information about their company to shareholders.
- Investment Risk - Risks that are specific to the securities being offered. These will be outlined in the Offering Document if one is available.
- Issuer Risk - Risks that are specific to the private company.
- Industry Risk - Risks faced by the private company because of the industry in which it operates.
In order for companies to accept investments from residents of Quebec, they must make any applicable Offering Document available in French.
No! The amount you invest will go solely to purchasing shares. FrontFundr receives compensation from the companies raising capital through the FrontFundr platform.
All FrontFundr traffic is sent over an encrypted, ‘https’ connection. All personal information is encrypted before being stored on our secure server. We are legally required to adhere to the latest security standards.
We at FrontFundr look to build a trusted brand, rooted in our core values of innovation, education, simplicity, empowerment, trust and transparency. FrontFundr is registered as an Exempt Market Dealer with the Provincial Securities Commissions in Canada. We are proud that Canadian securities legislation maintains the highest level of integrity in its governing and monitoring of Canadian businesses, which helps protect those investing in these companies.
All questions regarding an investment or specific company should be directed to FrontFundr during an active campaign. A FrontFundr representative can be reached through the chat feature on the FrontFundr platform, by sending an email to firstname.lastname@example.org or by calling 1-800-804-1524.
Equity Crowdfunding campaigns have up to 90 days to raise at least their minimum funding goal. If the company is not using Equity Crowdfunding to raise capital, they are free to choose their preferred closing date, which will be indicated in their campaign profile. It is important to note that a company can choose to close the campaign anytime after surpassing their minimum funding goal.
We are required by the Canadian Securities Commission to verify the identity of each investor that uses the FrontFundr platform. This is done for the security of each investor and the companies that they invest in. You will only be asked to upload these statements if your information can not be verified automatically through our online process.
Funds are transferred to FrontFundr to hold in escrow by means of e-cheque through the FrontFundr Platform for Canadian investors, or Wire Transfer, Direct Deposit, or by Sending a Cheque for non-Canadian investors. E-cheque has no banking limits and so allows you to transfer the full amount of your investment in one transaction. Payment instructions will be provided after the investment documents have been signed for your investment. Credit cards are currently not accepted for making an investment through FrontFundr.
Once funds have been received and accepted by FrontFundr, a confirmation will be sent to the investor via email. Payments may take up to one business day to process once received.
If the investment opportunity has been approved to accept investments through registered accounts, it will be indicated in the ‘Investment Highlights’ under a company’s overview and the option will be made available when making an investment. An investor that wishes to use a registered account to make the investment needs to have or open an account with Western Pacific Trust Company (WPTC). FrontFundr will facilitate the opening of an account at WPTC. The costs involved with opening an account at WPTC are a $135 annual (recurring) fee and a $75 transactional fee. All investments through registered accounts must be submitted no less than 3 weeks before the scheduled closing date of the company’s campaign.
Any investment opportunity on FrontFundr can be gifted to another person or entity. The option to gift an investment will be made available during the investment process. The documents will be adjusted appropriately and the investment will be registered in the recipient’s name. The gift recipient will be notified of the investment once the investment has been finalized and will be instructed to create a FrontFundr account, in order for the investment to be transferred to their FrontFundr investment portfolio.
Once a company surpasses their minimum fundraising goal, they have the option of closing individual investors and converting them into shareholders. This can be done multiple times before the end of the overall campaign. Every time new investors are accepted this is called a close and companies that have several closings are considered to have rolling closes.
When a company chooses to set no closing minimum, any amount of money invested will be closed regardless of the overall amount achieved. The amount used to determine the percentage on the tracker is the target amount, which is the amount set by the company to indicate the desired amount they are looking to raise. Please note that this does not require the company to meet this amount in order for your investment to be processed.
As an exempt market dealer we are required to verify the identity of each investor for the protection of both the companies and investors. For this process we use Trulioo to verify your identity against two reliable sources. Don't worry, this has nothing to do with your credit score and this will not be impacted.
If Trulioo is unable to verify your identity, you will be asked to upload a downloaded version of a utility bill and of a financial statement. These documents can not be screenshots or photos and must clearly show your name and address on one and name and financial instituion on the other.
It is important to stay up-to-date on a company you invest in, not only to monitor their growth and success, but also to promote their developments throughout your network and help to fuel their success. Besides following the company on social media, each shareholder will be invited to the company’s mandatory Annual General Meeting. Companies are also encouraged to keep shareholders updated with at least a quarterly newsletter.
Once a campaign closes successfully, the company will conduct their closing responsibilities to finalize the investments and accept their new shareholders. As the investor, you will receive an email from FrontFundr once the investment has been finalized. A copy of the Trade Confirmation, the investment Share Certificate and the fully executed investment documents will be accessible through the ‘Investments’ tab of your account page on FrontFundr, under each completed investment.
A company’s campaign will still be successful as long as they surpass their minimum fundraising goal. If this does not happen before the closing date, all funds will be returned to investors without penalty or fee.
For the purchase of any investment, there is no tax event - therefore, there is no filing requirement or tax implication. Only in the event that you receive income or a capital gain from your investment will you need to file anything with your taxes. In this event, the company that you hold the shares in will distribute the necessary T3 or T5 forms to it’s shareholders.
The availability and details of any tax credit on an investment will be outlined in the company’s Offering Document. If you are eligible for a tax credit on your investment, the company you invest in will file your signed Share Purchase Report (included in the investment documents) with the appropriate provincial government, on your behalf. Once the forms have been processed, the provincial government will provide a tax form to the company to pass along to their shareholders. Once received, this form should be filed along with the rest of your taxes. It is important to note that the tax credit is taken from a budgeted pool of capital, which means that the tax credit is not guaranteed and is dependant on the funds available in the government’s pool of capital.