- Do you only work with private companies?
- What type of industries do you work with?
- Do you work with companies outside of Canada?
- Who determines the valuation?
- What do I need to do for the due diligence process?
- Do I need audited financial statements?
- How much money can my company raise?
- How much money can investors invest?
- How long is a campaign open?
- What is the best way to market my campaign?
- Am I able to cancel my raise?
- What happens if I go over 50 shareholders?
- How do I know if I will need to file a Report of Exempt Distribution after my campaign?
- What if we don't hit our target raise?
- What is required for the close of a campaign?
- How long after the campaign before I receive the transfer of funds?
- How will I manage all of my new investors?
Q: How much does a campaign cost?
A: The basic fees consist of a due diligence and listing fee (payable upfront) and a trade fee (payable upon successful closing of the raise). The due diligence and listing fee starts at $5,000 and the trade fee starts at 7% cash and warrants. For a more detailed proposal submit an application.
Q: What type of securities can you facilitate?
A: FrontFundr is a registered securities dealer in eight provinces across Canada. As a result, we can support any type of financing. We facilitate all types of securities, but the most common securities include equity, debt, convertible notes, and SAFE’s (Simple Agreement for Future Equity).
Q: Where do I start?
A: Fill out an application form and a member of our team will be in touch to discuss your goals and objectives, and to assess if an equity crowdfunding raise is a good fit for your business.
Q: Do you only work with private companies?
A: No. FrontFundr is an exempt market dealer, meaning we have a special license that allows us to work both with private and public companies to access all applicable prospectus exemptions across Canada.
Q: What type of industries do you work with?
A: FrontFundr is industry agnostic and reviews each business individually based on its specific merits.
Q: Who determines the valuation?
A: We will provide some material and guidance based on your company's industry, then you will develop your own methods for determining valuation prior to our due diligence process. All valuations are reviewed and discussed during the due diligence process to ensure a fair valuation is established for both the company and investors.
Q: What do I need to do for the due diligence process?
A: After establishing your goals and objectives, and structuring your deal, you will be assigned a dedicated campaign coach, who will be your main point of contact. They will work with our due diligence team to perform a thorough review of your company, focusing on the corporate, financial and management elements of your business.
Q: Do I need audited financial statements?
A: Raising capital in Canada is governed by provincial securities regulators. Every province has a different set of rules depending on the type of investors you are looking to bring on board, so we will work with you to structure your offering in the most efficient and cost-effective way.
In general, if you are raising under the Offering Memorandum or Ontario Crowdfunding Exemptions (and have, to date, raised over $750,000 for your business, since inception), then you will need to have your financial statements audited.
If you are raising under the Ontario Crowdfunding Exemption (and have raised over $250,000 for your business, since inception), then you will only be required to have your financial statements reviewed, not audited.
Q: How much money can my company raise?
A: There are no overall limits to how much your company can raise. However, there are limitations within specific exemptions you need to be aware of, as the amount each company can raise depends on the structure of your specific offering.
For example with National Instrument 45-110, also know as the Start-up Crowdfunding Rule, businesses can raise up to $1.5 million during a 12-month period.
On the other hand, if a business uses the Offering Memorandum Exemption, the Accredited Investors Exemption, or the Family, Friends and Business Associates (FFBA) Exemption, there are no limits.
Q: How much money can investors invest?
A: Investor limits are also determined based on the exemptions you use to raise capital.
With National Instrument 45-110 everyday investors, also known as retail investors, can invest up to $2,500 per company, per crowdfunding campaign, per 12-month period. If deemed suitable by a registered dealer this limit increases to $10,000.
The limits for the Offering Memorandum Exemption depend on the provincial residence of the individual looking to make an investment. BC investors have no limit, but investors who live in the rest of Canada have a limit of $10,000, unless they satisfy certain additional criteria. You can learn more about provincial securities regulation here.
There are no investor limits for investors who are investing under the Accredited Investors or Family, Friends and Business Associates Exemptions.
Q: How long does a campaign run for?
A: The length of a campaign can be tailored to suit your company’s specific needs. We recommend keeping it open for at least 30 days and for a maximum of 90.
Fundraising takes a lot of work on your part, and momentum is a crucial part of any successful campaign. However, campaigns are legally allowed to stay open as long as your chosen exemption allows.
Q: What is the best way to market my campaign?
A: Your campaign should be as unique as your product or service, and the message should be clearly conveyed across all relevant channels.
We will provide a dedicated campaign coach who will work with you to determine the most effective way to reach your target audience and to build momentum. They will also work with you to help identify the key groups that are most likely to invest in your company; these typically include your own personal networks and existing customers.
Note that fundraising requires a lot of time and hard work, and you need to make sure you are fully prepared.
Q: Can I cancel my raise?
A: Yes. You can cancel your raise at any time during your campaign. However, your initial onboarding fee will not be refunded and you are also subject to cancellation fees.
Q: What happens if I go over 50 shareholders?
A: There is a misconception among certain groups that going over 50 shareholders is a bad thing for private companies. It isn't!
Once a company has over 50 shareholders, it is required to file a two-page Report of Exempt Distribution with the Securities Commission after any subsequent financing.
We will work with you to help guide you through this process, should you exceed 50 shareholders, and provide you with the relevant forms you need to submit.
Q: How do I know if I will need to file a Report of Exempt Distribution after my campaign?
A: If you choose to use the Offering Memorandum Exemption, the Crowdfunding Exemption, or have more than 50 shareholders after a successful raise, you will need to file a Report of Exempt Distribution.
This report will need to be filed with each province you accept new shareholders from. We'll be on hand to guide you through this whole process!
Q: What if I don't hit my target raise?
A: The target isn’t as important as hitting your minimum.
The minimum is the amount you need to raise to be able to close your campaign successfully. So, if you do not hit your minimum then the campaign will not close and all funds will be returned to investors.
Your target raise is the amount that you are striving to reach in order to fully execute your growth plans. If you do not reach this amount, but raise more than your minimum, you will still be able to close your round and collect the funds.
The maximum raise is the highest amount of capital you are willing to raise. Once you hit this number, your campaign will be closed and no additional funds can be raised. Surpassing your target amount is always great, but setting a maximum protects your company to ensure that you don’t give up more equity than planned.
Q: What is required for the close of a campaign?
A: We remove the complexity of processing your investors and closing your campaign, including preparing all of the legal closing documents for your campaign. These documents include Subscription Agreements, Voting Trust Agreements, Director's Resolution, Share Certificates, and Report of Exempt Distribution. This saves you a significant amount of time and money.
All investors and the businesses authorized signatories will sign their investment documents electronically, making the close a smooth and seamless process.
Q: How long after the campaign before I receive my funds?
A: Once the closing documents have been signed and the new shareholders have been added to your Corporate Securities Register, FrontFundr will transfer the funds.
Q: How will I manage all my new investors?
A: If you are offering shares with voting rights, we recommend putting a Voting Trust Agreement (VTA) in place for your smaller investors. This will transfer the voting rights to a trustee, who will vote on behalf of these investors, and thus allows you to retain overall control of your corporate governance. We have templates you can use to help save you preparing this.
Additionally, we recommend that you communicate frequently with your new investors. Be proactive and provide them with updates on a regular basis, and hold quarterly meetings to let them know what is going on, and to answer any questions they might have.
Ready to Raise?
Are you looking for capital to grow your business? Do you have a legion of loyal customers you could turn into brand ambassadors? Why not take our readiness survey and see if crowdfunding is a good fit for you!