- What is FrontFundr?
- Does FrontFundr provide any investment advice?
- How do I know if an investment is suitable for me?
- What is the risk of investing?
- What is return on investment?
- What is an Eligible Investor, Accredited Investor and Retail Investor?
- How do I know if I can invest in a company?
- Is there a limit to how much I can invest?
- What is the difference between an Offering Memorandum Raise and Crowdfunding Raise?
- How does FrontFundr screen for investment opportunities?
- What tools are available for me to evaluate a company?
The Private Market
- Private Capital Market vs. Public Market
- Is the Exempt Market regulated?
- What is the difference between Crowdfunding and Equity Crowdfunding?
- How can I make money on my investment?
- What is the maximum I can lose?
- As a Quebec resident, I keep being told I can not invest due to 'Security Laws'
- When do private companies typically go public?
The Process of Investing
- Common Security Types you will see listed on FrontFundr
- How long does a company have to raise capital?
- Why do some companies have Closing Minimums?
- What happens if a company I invest in does not meeting their goal?
- What are rolling/continuous closes?
- What confirmation do I receive when paying via e-transfer, wire transfer, and direct deposit?
- Can I pay via cheque?
- Why do I have to upload a copy of a bank statement and utility bill?
- Can I invest through an RRSP, TFSA, or a LIRA?
- Who should I contact if I have questions for the company I am interested in?
Q: What is FrontFundr?
A: FrontFundr Financial Services Inc. (“FrontFundr”) is a registered Exempt Market Dealer (EMD) with 8 provincial securities commissions (British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, and Nova Scotia).
An EMD is a company that is an investment dealer in the private or ‘exempt’ markets. The Canadian Securities Administrators maintain a database of all actively registered market participants, including FrontFundr. You can confirm our registration here.
On FrontFundr, companies can raise capital from the ‘crowd’ with the use of different prospectus exemptions. The crowd is made up of the company’s current customers, social networks and the general public.
Once invested, these shareholders are instrumental to fuelling the success of a business through a number of different ways:
- Bottom line: loyal and repeat customers
- Social proof: each shareholder is a brand champion - resulting in a network effect of free marketing.
- Expertise: shareholders include industry experts who may provide their services, at a discount or even introduce the company to other experts.
- Diversity: a diverse shareholder base is an amazing source of feedback - more perspectives generally results in better products or services.
At FrontFundr, we can speak from experience, as we have raised capital from the ‘crowd’ ourselves and have reaped these very benefits.
For more information on who we are, visit our about page here.
Q: Does FrontFundr provide any investment advice?
A: As FrontFundr is an EMD, we are not permitted to provide any specific or general investment advice. However, we perform a mandatory ‘suitability analysis’, as defined in National Instrument 31-103, on each investment we process. This analysis entails a review of an investor's financial circumstances and investment timeline.
Q: How do I know if an investment is suitable for me?
A: Before investing you should always understand the risks involved and be sure that the investment aligns with your personal and financial circumstances, your level of concentration in private securities and your overall tolerance for risk and your goals. The questions asked throughout the process form part of our know-your-client responsibilities, or KYC, and they assist us in determining if an investment is suitable at a given point in time. If an investment is determined to be unsuitable, a client may still have the opportunity to make the investment, if allowable under set limitations of the exemption itself. Working with Canadian regulators, FrontFundr has developed a proprietary suitability automation management system (SAM), to assist with processing numerous and simultaneous trade requests consistently and accurately.
Q: What is the risk of investing?
A: Investments of any kind are subject to risk. Oftentimes, risk and return are positively correlated - the higher the risk, the higher the expected return; and the lower the risk, the less the expected return.
Investments in any exempt market/private security, including investments through FrontFundr, are considered high-risk for some of the following reasons:
Risk of loss: There is a possibility that you may lose your entire investment, if the company were to fail before providing liquidity or any return to shareholders.
Liquidity Risk: There is currently no marketplace or exchange to sell shares in private companies. Generally, you cannot sell investments in a private company until a liquidity event occurs. A liquidity event - meaning that your investment is ‘liquid’ and can be sold - is typically a listing on a public exchange (e.g. TSX, TSX Venture, NEO, or CSE) or, some instances, takes the form of an acquisition by another company. A liquidity event may never occur, and there is the possibility that you will never be able to sell your shares.
Lack of Information: Companies are required to provide shareholders with annual financial statements. However, shareholders of the companies can waive this requirement and it does not apply to investors who are not shareholders (e.g., noteholders or SAFE holders).
Throughout our engagement with a company, we encourage the company to provide shareholders with all material business updates and that they understand the obligation and benefit of doing so.
Investment Risk: Risks that are specific to the type of securities being offered.
Issuer Risk: Risks that are specific to the company.
Industry Risk: Risks faced by the company because of the industry in which it operates.
Q: What is return on investment?
A: Outside of some yield investments (secured debt), a return on any investment can not be guaranteed, by FrontFundr or anyone else, including the company raising capital. Definitive statements regarding a potential public listing or its timing, beyond what has been publicly disclosed, are also not permitted.
Investments generate returns through either a capital gain realized upon sale, or some form of income distributed to investors. In most circumstances, investments made through FrontFundr cannot be sold until the company experiences a liquidity event, such as a public listing or acquisition. For more information regarding this please consult your lawyer or the company directly.
With certain investments, such as income generating investments like mortgage investment corporations, a targeted return may be identified. This targeted return is not guaranteed.
These offerings, as well as some investment fund issuers, may provide you with the opportunity to redeem your securities in exchange for cash. These redemption rights often come with a penalty for early-redemption (or in some cases, a penalty for any redemption) and can be suspended by the company in certain circumstances.
For specific questions regarding the potential return on an investment, please consult the company’s offering documents or speak with a FrontFundr dealing representative at email@example.com.
Q: What is an Eligible Investor, Accredited Investor and Retail Investor?
A: FrontFundr is open to investors of all levels of investing experience.
In Alberta, Saskatchewan, Ontario, Quebec, New Brunswick and Nova Scotia, investors are categorized as either an Eligible Investor, Retail Investor or Accredited Investor.
An Eligible Investor meets one of the below criteria:
- Individual annual income before taxes exceeded $75,000 CAD for the past 2 years, and expected to be the same or above this calendar year,
- Income before taxes, alone or combined with a spouse, exceeded $125,000 CAD for the past 2 years, and is expected to be the same or above this year, or
- Total Net Assets as an individual or combined with a spouse exceeds $400,000 CAD.
An Accredited Investor is applicable in all provinces. The most common thresholds for individuals are:
- An individual whose annual income before taxes exceeded $200,000 in each of the 2 most recent calendar years and is expected to exceed that amount in the current year,
- Annual income before taxes combined with a spouse exceeded $300,000 in each of the 2 most recent calendar years and expected to exceed that amount in the current year,
- Net Financial Assets, individually or combined with a spouse, is greater than $1,000,000 (not including real estate), or
- Net Assets, individually or combined with a spouse, is greater than $5,000,000 (including real estate).
A Retail Investor is someone who does not meet the criteria for Eligible or Accredited Investors.
For further Accredited Investor and Eligible Investor Definitions please refer to the Definitions in 1.1 of NI 45-106.
Q: How do I know if I can invest in a company?
A: Residents of a province FrontFundr is registered in; BC, AB, SK, MB, ON, QC*, NS and NB, over the age of 14, may be eligible to invest through FrontFundr. Investors under the age of majority within their home province must have a parent or legal guardian sign an investment waiver prior to signing the investment documents.
*Based on the Quebec Security Act Item 40.1, non-Accredited residents of Quebec may only invest in an opportunity in which the Offering document has been provided in French.
For more information on investor eligibility, please visit our Regulation page.
If you do not meet any of the above criteria and would like further information, please contact firstname.lastname@example.org.
Q: Is there a limit to how much I can invest?
A: Investment limits are dependent upon a combination of the exemption utilized (Crowdfunding, Offering Memorandum), your qualification (Retail, Eligible or Accredited), and your province of residence.
Please note that FrontFundr does not set the minimum or maximum individual investment for any campaign - they are prescribed by regulation and/or at the company’s discretion. Generally speaking, if you are an accredited investor or a Friend, Family member, or Business Associate (FFBA) of an executive at the company you are investing in, you will not have an investment limit.
The limits as set out below are for investors that do not qualify as an Accredited Investor or FFBA. Per CF rule 45-110, when using the Crowdfunding prospectus exemption everyone can invest a maximum of $2,500 per campaign. This limit is increased to $10,000, provided that FrontFundr has deemed the investment to be suitable for the investor.
For Offering Memorandum raises, all investors in British Columbia and Eligible Investors in Manitoba, have no investment limit. For investors in other provinces, it is a bit more complicated
For investors living in AB, QC, ON, SK, NB and NS:
- Eligible investors can invest up to $30,000. This amount increases to $100,000 if FrontFundr has deemed the investment suitable. These amounts are the maximum limits on an annual basis.
- Retail investors can invest up to $10,000 in Offering Memorandum investments on an annual basis.
Non-eligible investors in Manitoba can invest a maximum of $10,000 per campaign. This is on a per campaign basis, not annual basis.
If you are still unsure, FrontFundr will automatically calculate your investment limit in the first stage of the investment process, after clicking ‘Invest Now’ on a company in Investment Opportunities. You can also reach out to our team for more information at email@example.com.
Q: What is the difference between an Offering Memorandum Raise and Crowdfunding Raise?
A: Crowdfunding and Offering Memorandum raises are very similar - they both allow companies to raise capital from retail and eligible investors across Canada.
Specifically, they differ in some of the following ways:
- Audit requirement: companies using an OM must provide audited financial statements indefinitely; crowdfunding does not require this.
- Raise limits: crowdfunding is restricted to $1,500,000 over any 12 month period; there are no limits with an OM.
- Investor limits: as described above.
- Length: a crowdfunding campaign can run for up to 90 days; there is no limit for OMs, as long as financial statements for the company are up to date.
- Disclosure: an OM is a longer form document than the offering document that is prepared for crowdfunding campaigns.
- History: OMs have been used in the exempt markets in most jurisdictions since the early 2000’s; Crowdfunding was introduced to Canada in 2016.
If you are an issuer thinking about a capital raise on FrontFundr and are unsure what’s best for you, please check out our FAQ for entrepreneurs.
Offering Memorandum raises are facilitated through NI 45-106 section 2.9, and the particular form of offering memorandum is prescribed here. Crowdfunding Raises use rule 45-110, which allows everyone to invest a maximum of $2,500 per campaign. This limit is increased to $10,000, provided that FrontFundr has deemed the investment to be suitable for the investor.
Q: How does FrontFundr screen for investment opportunities?
A: We perform a preliminary review on all companies that apply to raise capital through FrontFundr, which results in the rejection of over 92% of applicants. This can be for a number of reasons, such as not being a good fit for crowdfunding or not being at the right stage of their business development. FrontFundr then conducts a thorough due diligence review on each company prior to their listing.
FrontFundr's due diligence approach includes, but is not limited to:
- Review of key corporate documents (e.g, shareholders’ agreement) and minute book (e.g., reviewing past corporate resolutions)
- Discussions and interviews with internal and external stakeholders (e.g., CEO, regulators)
- Financial analysis (e.g., stress testing projections, statement analysis, cash flow analysis)
- Background checks (e.g., criminal, credit, regulatory, and reputational)
- Business analysis (e.g., product-market fit)
The final step of FrontFundr’s due diligence process is a meeting between the prospective company and our Investment Review Committee (IRC). For more information check out our guide on our due diligence process here.
Q: What tools are available for me to evaluate a company?
A: Doing your own due diligence on each company you invest in is important to ensure that the investment features align with your own financial goals, as well as the company’s objectives, beliefs and goals. Transfers and sale of the securities may be limited - so please ensure the company aligns, and will continue to align with your own beliefs.
When evaluating a company the following are resources you can use:
On the Campaign page:
- Introductory Video
- The 'Overview' tab: provides general level information
- The 'Documents' tab:
- Investor Deck - a visual overview of the investment; exit strategy and short-term and long-term goals
- Offering Document - a legal document outlining all risks, material information about the company and investment opportunity, information about the security offered, the planned use of funds, management team, etc.
- Financials – please email firstname.lastname@example.org for financials for a particular issuer, if not already made available.
- Internet search of the company, competitors, industry and other information you deem to be relevant.
THE PRIVATE MARKET
Q: Private Capital Market vs. Public Market
A: 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 exhaustive summary of a company and its offering that is reviewed and approved by security regulators. A prospectus is what enables the securities issued under it to trade in the public markets through an exchange (e.g. TSX, CSE, NASDAQ, NYSE, or NEO).
The alternative to a prospectus is to raise capital through prospectus exemptions in the private capital market. Capital raised through these exemptions is typically facilitated through an exempt market dealer, such as FrontFundr.
These exemptions allow early-stage and growth companies to expand their business without undergoing the expense and time required to conduct a public offering. Very often, many companies forgo placing their shares on a public exchange and remain private, using available exemptions through a dealer like FrontFundr to access capital from retail, eligible or accredited investors.
Q: Is the Exempt Market regulated?
A: Yes. There are several instruments and regulations that govern the participants and capital in the exempt market.
Canadian provinces set the regulations for their respective jurisdictions. All of the provincial and territorial security regulators are part of the Canadian Securities Administrators. The Security Administrators recognize Self-Regulatory Organizations (SRO), such as the Mutual Fund Dealer Association (MFDA) and Investment Industry Regulatory Organization of Canada (IIROC), as having power to enforce industry regulations.
The Exempt Market is not governed by a designated SRO, it is guided by two main National Instruments (NI). NI’s are legislations adopted by all thirteen of Canada’s provinces and territories. The first is NI 31-103. This instrument defines the participants of the exempt market and the qualifications they must meet.
The second is NI 45-106. In this instrument, the requirements and eligibility to invest in exempt securities is established - the specific prospectus exemptions are identified in this document.
Q: What is the difference between Crowdfunding and Equity Crowdfunding?
A: Many people’s conception of ‘crowdfunding’ is formed through platforms such as KickStarter and GoFundMe. Those platforms, and the companies on them, use a donation, pre-order or rewards model to raise capital from the ‘crowd’ for the launch of a company’s particular product.
What we do here at FrontFundr is ‘Equity Crowdfunding’. It can contain all the features of the crowdfunding described above, as some of the companies listed on FrontFundr offer their product as perks for making an investment, but also introduces a new element; direct ownership or position in that company. Companies are able to generate all the hype associated with crowdfunding, but also empower these investors to become brand champions, with a vested interest in amplifying the reach of the company to new heights.
Q: How can I make money on my investment?
A: Typically, there are three ways in which you may see a return on your investment:
- The company is acquired by another company, at which point you would either sell your shares or receive shares in the company making the acquisition;
- The company goes public on a stock exchange, at which point you may sell your shares on the open market; or
- The company generates excess cash and decides to issue dividends to their shareholders. The company’s 'Offering Document' and 'Shareholders Agreement' will outline any specific sale restrictions on your shares.
Important note: There is no guarantee that you will receive a return on your investment.
Q: What is the maximum I can lose?
A: The maximum that can be lost is the amount you invest. Your investment does not make you liable for any of the company’s payables or debts.
Q: As a Quebec resident, I keep being told I can not invest due to “Security Laws”
A: For companies to accept investments from non-accredited residents of Quebec, they must have the Offering Document or Offering Memorandum translated into French. This is a requirement of Quebec securities law, specifically the Quebec Act Item 40.1.
To see if you qualify as an accredited investor, please read the definition here.
For a list of campaigns that are available to all residents in Quebec, please reach out to us at email@example.com.
Q: When do private companies typically go public?
A: As there are strict securities laws in place directly regarding this question, FrontFundr cannot provide any time horizon or assurances that a company will go public, beyond what has been stated publicly by the company. Furthermore, not all companies raising on FrontFundr have plans on going public - they may prefer the acquisition strategy or want to pay dividends at some point in the future.
When applicable and permissible within securities law, companies may discuss their expected or desired exit strategy in their offering materials contained within their campaign page on FrontFundr.
THE PROCESS OF INVESTING
Q: Common Security Types you will see listed on FrontFundr
A: The following definitions provide examples for illustrative purposes only. For details on an investment opportunity please consult the Offering Document under ‘Documents’ on the campaign page.
Equity (i.e. common shares and preferred shares): Direct ownership in a company. This is the most straightforward and common form of financing that companies will seek.
E.g. If my company was valued at $1,000,000 and someone invested $100,000, that investor would own 9.1% of the company ($100,000 investment divided by the new value of the company, $1,100,000).
Using industry terms, we would describe this deal as follows:
- The company’s pre-money valuation is $1,000,000 (value before new money)
- The company’s post-money valuation is $1,100,000 (value after new money)
- The company has sold 9.1% of its equity
Convertible note: A convertible note is often used by early-stage companies. The main reason for this is that a valuation of the company is not required. Convertible notes will convert into shares upon the occurrence of a defined conversion event. Usually, this event is a priced round (i.e., where the valuation is determined) and it may be subject to a threshold to a minimum offering (e.g., at least $2MM). If a conversion event does not occur, the principal amount and any accumulated interest converts into shares at the end of the term through a manner described in the convertible note agreement. If the company has the option to pay the gross amount in cash rather than convert into equity shares, it will be noted in the convertible note.
A convertible note will typically contain the following terms:
- Valuation cap: As an early stage company, pinning down an accurate valuation can be an impossible task. Rather, the company sets a ‘valuation cap’ - this sets the maximum value that the investment can be ‘converted’ against. Investors stand to benefit if the conversion event financing is at a valuation higher than the valuation cap.
- Discount rate: in the event that the valuation of the priced round is below the valuation cap, or that conversion against the valuation cap would result in less shares being issued, convertible shares are converted at the share price in the priced round, less the discount rate.
- Interest rate: the rate at which the principal investment grows. The aggregate amount of the note, comprised of the principal amount and any accumulated interest, is the amount that is subject to conversion.
SAFE (Simple Agreement for Future Equity): As stated in its name, this investment is not for equity - rather, future equity. It is similar to a convertible note in that investors benefit from the discount rate applied to their share price upon a conversion, however, it differs in some key ways.
As a SAFEholder, you are not a shareholder nor are you afforded any rights as a debtholder like convertible debt holders. Typically, SAFEs do not pay interest. Conversion events are not subject to a minimum, but may require a certain security issuance (e.g., preferred shares).
Ex. You buy a SAFE today offering a discount of 20%, and in 1 year the company does a Common Share round, selling Shares for $1/share. Your SAFE would convert into shares at $0.80/share ($1 x 80%). A $1000 in a SAFE would give you 1250 shares vs. 1000 shares if bought during the common share round. This example is for illustrative purposes only.
Units: a unit is a composition of multiple securities, combined into one security - a Unit. A single unit can house any number of securities.
In almost all cases, it is much simpler than that. A common unit structure is one share and a ½ warrant. For every two units, an investor, having one whole warrant, would have the right to purchase one additional share, per the terms of the warrant.
Warrants: a warrant provides the right, but not the obligation, to purchase a share at a specified price within a specified time frame. Regardless of the future price of the share, upon exercise of the warrant, the holder will be able to purchase it at the warrant ‘strike price’ - thus, it is only of value when the share price exceeds the warrant strike price.
You may be thinking - you are just describing an option! Yes, they are very similar. The difference lies in who they are issued to - options are typically reserved for employees; warrants are for investors.
Generally warrants are issued as part of a Unit security.
Q: How long does a company have to raise capital?
A: Companies that are using the Crowdfunding exemption have 90 days to be listed on the FrontFundr platform with this exemption available for investors. If the company is not using the Crowdfunding exemption to raise capital, they are free to choose their preferred closing date, which will be indicated in their campaign page. It is important to note that a company can choose to close the campaign at any time after surpassing their minimum funding goal.
For more information on if the company does not hit their minimum closing requirement, please refer to “What happens if a Company I invest in Does Not Meet does not meet their goal?”.
Q: Why do some companies have Closing Minimums?
A: Every company is raising capital for different purposes. For some, it may be to grow a specific part of their business, or fund an indefinite marketing initiative. With this in mind, the company may choose to set a closing minimum. In other circumstances, our team may require a minimum to be hit if the company is an early-start up, as a means of investor protection. If the company does not raise sufficient funds to achieve their goal they are raising for, they would not accept funds from investors, as it puts their investments at an unnecessarily high risk of loss. The company’s use of funds will be detailed in the offering materials. If a company does not have a closing minimum they will be able to close on all investments received.
On a company’s campaign page, there is a tracker that indicates the value of investments that have been completed, the dollar amount processing, a target the company is hoping to raise, and the maximum they can raise. The amount used to determine the percentage on the tracker is the company’s target amount. Please note that this does not require the company to meet this amount in order for your investment to be processed - your investment can be accepted by the company as long as the closing minimum is achieved.
Q: What happens if a company I invest in does not meet their goal?
A: Companies can still close without hitting their goal/target, as long as they hit their closing minimum.
If a company has a closing minimum that they do not reach by the closing date, FrontFundr will return all funds to investors.
Q: What are rolling/continuous closes?
A: For companies not using the Crowdfunding Exemption, subject to any minimum raise that may be required, they can elect to conduct closings at their discretion. This is commonly seen with companies that distribute a monthly dividend, such as Mortgage Funds, MICs and REITs, where they will close investors on a monthly basis.
To find out if the closing date on the campaign page is for the monthly close, or final close, please email firstname.lastname@example.org.
Q: What confirmation do I receive when paying via e-transfer, wire transfer, and direct deposit?
A: Once funds have been received and accepted by FrontFundr, a confirmation will be sent to you via email. This confirmation may take up to two business days. If you made payment via wire transfer or a direct deposit, please ensure that you send a receipt or other form of verification to email@example.com so we can reconcile and match the payment to your investment.
Q: Can I pay via cheque?
A: Please email firstname.lastname@example.org for information.
Q: Why do I have to upload a copy of a bank statement and utility bill?
A: If our identity verification provider (Trulioo) is unable to verify your identity, you will be asked to upload a bank statement and a secondary document that contains your full name and address, so that we can conduct the verification to the standards required by (The Financial Transactions and Reports Analysis Centre of Canada) FINTRAC.
For more information on Trulioo please review the Question “Who Is Given Access to My Information?”. A bank statement is used for the purpose of verifying your full name. As banks and financial institutions collect their own data and information on you (“KYC”), we use a bank issued document as a part of the manual identification process.
Note: Verifying your identity is NOT related to your credit score and neither we nor our service providers run a credit check.
If you are required to upload documents as a part of verifying your identity, this may have occurred for one of the following reasons:
- Your First Name, Last Name or Address did not match or exist in the databases Trulioo checks;
- Your birthdate did not match the databases Trulioo checks;
- You recently moved; or
- Your mailing and residential address are not the same
If any of the above are applicable, please email email@example.com.
We are required by FINTRAC to verify the identity of each investor that uses the FrontFundr platform. This is done for the security of each investor and the companies they invest in.
Q: Can I invest through an RRSP, TFSA or a LIRA?
A: Yes, you can. However, most institutions (e.g, TD, CIBC, BMO) will not hold exempt securities in their plans - meaning you cannot use an account from them for your investment.
Subject to a company’s eligibility, FrontFundr works with the following trust companies that specialize in the private markets; Western Pacific Trust Company (WPTC), Computershare, Olympia Trust and Community Trust.
If the investment opportunity has been approved to accept investments through registered accounts, the trust companies that have approved the offering will be indicated under the ‘Terms’ tab on the company’s campaign page. If available, when you are making your investment, you will be asked if you want to invest through a registered plan provided by one of the approved trust companies. If the company has decided to work with WPTC or Computershare, you will be able to open an account directly through FrontFundr. Once the trust company has opened your account, which can take a few business days, we will send you your investment documents and specific instructions to fund your new registered account. If the company has elected to work with Olympia Trust or another Trust Company, you will need to visit their website and open an account directly with them. Once they have opened your account, please return to the investment and enter your plan number as described below:
If you already have a TFSA, LIRA or RRSP at a Trust Company that has approved the investment opportunity – please select ‘Use existing trust account’ and input your plan number.
We cannot facilitate investments through your registered account held at another financial institution. However these accounts can be used to fund your new account at any of the trust companies we work with, if needed.
Q: Who should I contact if I have questions for the company I am interested in?
A: For any questions regarding the investment opportunity or the company itself, please use the Q&A section on their campaign page. These questions will be sent directly to the company and will be answered by them.
For questions regarding the terms of the investment, or general questions about FrontFundr, please contact our support team through our online chat, email at firstname.lastname@example.org or call our toll free number at 1-800-804-1524.
Please note that companies do not have access to the online chat on the FrontFundr website.
Q: How secure is my information on the FrontFundr platform?
A: All FrontFundr traffic is sent over an encrypted, ‘https’ connection. All personal information is encrypted before being stored on our secure server. FrontFundr follows guidance and requirements set by the privacy commissions within the jurisdictions in which it conducts business.
Q: Who is given access to my information?
Q: Who specifically views your information and why?
A: FrontFundr’s Dealer Representatives: As an Exempt Market Dealer, FrontFundr is required to perform a suitability assessment on your investment. We collect information such as age, net income, net financial assets, employment status, total assets, and other information during the investment process to allow us to conduct this suitability assessment.
Trulioo: Trulioo is a third party provider that uses your full name, address, and birth date to confirm your identity. This is a part of our KYC (“Know Your Client”) process. If the information you provide to FrontFundr does not match the records Trulioo uses, we ask you to then upload, to FrontFundr, a bank statement to confirm your name, and a utility bill to confirm both your name and address with your FrontFundr Profile. These documents will only be viewed by FrontFundr.
Provincial Regulators: Your personal and investment information may be provided to provincial security commissions for each company you invest in, as well as for any audit we undergo to ensure our compliance with security regulations.
HelloSign: HelloSign is our document signing tool. The information provided in your profile, as well as the investment amount are added to a HelloSign document for you to sign electronically. The signed document is stored on the HelloSign platform.
PaySafe: If you decide to make the payment for your investment through our online debit payment option, your banking information will be provided to PaySafe to process the funds. FrontFundr will save and encrypt the last 4 digits of your account number.
Amazon Web Services: All investment documents, trade confirmations and share certificates are stored on our Amazon Simple Storage Services.
Q: Will I be charged any fees by FrontFundr as investor?
A: No, we will never charge you for making an investment through our platform. The full amount of your investment will be issued in securities and will be provided to the company you invested in. The company will then pay a portion of those proceeds to FrontFundr, as a trade fee for our services. The exact trade fee the company pays FrontFundr for your investment will be indicated in your trade confirmation, available shortly after closing via email and in your investment summary.
I AM AN INVESTOR, NOW WHAT?
Q: What happens at the end of a successful campaign?
A: As an investor, when a campaign closes successfully and your investment is accepted by the company, you will receive an email from FrontFundr with your trade confirmation and a link to your investment profile on FrontFundr, where you can find all the key documents for any of your investments, as well as ongoing updates from the companies you invest in or follow.
In cases where the company is using a Voting Trust Agreement, the securities will be registered and delivered to the trustee. Regardless of the registration, you are still the beneficial holder (i.e., you will continue to own all the commercial rights to these shares – for dividends, distributions and liquidity events) but they are to be registered in the name of the trustee per the agreement you signed to help the company administer a large shareholder base. This is also the case if you invested through a registered plan like a TFSA or RRSP.
In cases where you are the registered owner, you will be provided with the certificate or other form of ownership directly.
In most cases on FrontFundr, shares will be issued to investors through either a physical share certificate, or an electronic equivalent called a direct registration statement (DRS). Physical share certificates may be kept in the company’s minute book for safe keeping, but can be provided by the company upon request.
MY INVESTMENT WENT PUBLIC - WHAT DO I DO NEXT?
Q: Do I need to file anything for my taxes when making an investment through FrontFundr?
A: FrontFundr does not provide tax advice. Please consult with a tax or legal professional, as applicable.
Generally speaking, for individuals, a taxation event is only triggered upon a sale (capital gain) or receipt of income (interest, business, etc.).
Q: How can I stay up to date with the company I invest in?
A: We strongly encourage companies to continue to engage with their investor base after their FrontFundr campaign, through regular updates and other means to unlock their full potential as well-informed brand champions. These updates will either come directly from the company, or through FrontFundr, which you can either receive via email or view in your investor dashboard under ‘Completed Investments’. If you would like to receive these via email, please make sure you have opted in for the ‘Post Raise Company Updates’ email preference‘.
If you have any questions about the current operations of the company, please reach out to them directly. The company’s contact information can be found in your investor dashboard, in the ‘Details’ page for each company - accessed through ‘Completed Investments’.
For additional information – we encourage you to follow the company on social media, such as LinkedIn, Instagram, and Facebook.
As applicable, shareholders will also be invited to the company’s Annual General Meeting.
Q: My investment came with a tax credit - what happens next? (e.g. the EBC tax credit)
A: If you are eligible for a tax credit on your investment, FrontFundr will have you complete the necessary forms as part of your investment documents.
The terms and conditions of any offered tax credit will be outlined in the investment’s subscription agreement and on the company’s campaign page under ‘Terms’.
After the closing of the offering, the company is then responsible for filing the forms as required. Once processed by the applicable provincial security regulator, you will be provided with the form and procedure to file with your annual tax return.
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