Funding your Start-up is no longer a one size fits all! Everyone loves to see the headlines for the latest unicorn and flashy big numbers which grab people’s attention. But, what most entrepreneurs don’t know and need to realize is that there is a spectrum of funding (outside of organic growth) that may be available to them to realize their full vision. Venture Capital will always have a place, but both the options for start-ups and investors is changing.
Legislation Leading to this Change
Many updates to various laws have helped open up the investment world to new types of people, and increased options for who can legally take the risk needed to funding. To name a few:
1. Cryptocurrency sandboxes
Businesses considering launching initial coin offerings (ICOs) can register with the Sandbox initiative and can obtain exemptive relief under some securities law for a more flexible process than with traditional application
2. Accredited Investor Evolution
The SEC continues to amend its definition of accredited investors, recognizing there is a whole market of people who would invest if there were less requirements focusing on net worth and income, and more so on expertise and knowledge
3. Jumpstart Our Business Startups (JOBS) Act
Introduced under Obama’s presidency, it is designed to encourage funding of start-up businesses in the U.S. For instance, in 2017 the SEC amended the Act to increase the amount of money companies can raise through crowdfunding, and approved amendments that adjust for inflation in different investment circumstances.
Tech Platforms Propelling these Changes
Everyone has heard of Kickstarter, but this goes much deeper. And it is not only for products, but for actual investment in the ownership of your company.
Angel List has transformed this before, now we have everything from:
- Gust – whether you want to create a start-up, grow your existing one or simply raise capital, this company connects you with Angel investors across Canada
- Republic – this allows you to choose from a variety of start-ups to invest in, at entry level prices.
- Cryptocurrency trading platforms- for example, Binance IEO and Coinlist.
Investing Ideology Continues Evolving
Revenue Sharing
ClearBanc has changed the way e-commerce companies can raise sustainable growth - non-traditional venture style capital, which wants you to keep ownership of your company and create a company that doesn’t only 10x, but can actually sustain over the long-run
Social Capital Matters
Money isn’t everything, but impact matters.
Perhaps what is more important to you, as an investor, is not necessarily how much money you’ll earn, but what kind of sustainable world you are created by investing your money. Maybe you want to invest in companies aiming to increase education programs, or companies with important environmental initiatives. SVX and Open Impact connect you to socially impactful Canadian companies for you to potentially contribute to.
As the investment world changes, so will opinions on which companies people want to invest in and why they want to contribute to funding those start-ups. There’s no right or wrong answer for how your start-up should secure finances!
