M&A In A "Crowded" Market: Part I

You've probably heard about "crowdfunding" websites like Kickstarter and Indiegogo. On these sites, companies with a great idea that are in need of capital can let the world know about that idea and raise money to bring it to fruition. In exchange for the funds that a user contributes to the crowdfunding campaign, the user usually receives some type of reward such as a product pre-order or the like. As discussed on the blog last week, a new type of crowdfunding that became legal in Ontario and other Canadian jurisdictions (Quebec, Manitoba, Nova Scotia and New Brunswick) on January 25^th under Multilateral Instrument 45-108 ("MI 45-108") allows companies to raise funds in exchange for a different type of reward: equity in the company itself. According to the Ontario Securities Commission, equity crowdfunding allows new or existing businesses to raise capital by selling "many small stakes, usually in the form of shares, to a large number of investors over the internet."