Provincial securities commissions in British Columbia, Saskatchewan, Manitoba, Quebec, New Brunswick and Nova Scotia will allow companies to raise money through crowdfunding sites. But investor advocacy group FAIR Canada is worried crowdfunding will become a “magnet for scams” as fraud becomes easier.
“Under the best of circumstances, startups are very risky and the vast majority fail,” Neil Gross, executive director of FAIR Canada said to BNN in an email. “But crowdfunding will probably bring us the worst of circumstances: low barriers to entry will allow vast numbers of bad business ideas to compete with good ones for funding; illiquidity will be the norm so investors will have no chance to cut losses; and those who invest in a startup through crowdfunding will likely face dilution in subsequent rounds of financing, killing dreams of their micro-investment turning them into millionaires.”
Read full article & WATCH video here.
BNN.ca – May 15, 2015.
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