EQUITY C R O WD FUNDING OFFERS NEW ROUTE

StartEngine, and other online platforms like it, facilitates the U.S. JOBS (Jumpstart Our Business Startup) Act, which allows private companies to connect with investors for the funds they need. Sometimes described as helping a company do a “mini IPO,” StartEngine begins by sourcing public interest in the company for anywhere between 90 and 120 days. During that time, those who want to invest put in a non- binding reservation. If there is enough interest, the company sets a price per share and those with a reservation are first in line to buy shares, while StartEngine charges a fee on transactions. After the offering, the shares are traded not on the stock market, but on exchanges set up through platforms like StartEngine. The difference between equity crowdfunding and other crowdfunding platforms is that while Kickstarter and Indiegogo source donations in exchange for rewards or perks, the JOBS Act allows companies to raise capital by actually selling shares. And, while investors can come from anywhere in the world, this is a U.S. government initiative for U.S. startups and companies from only one other country are allowed to participate in the program — Canada. This type of fundraising wasn’t always possible. The U.S. Security Exchange Commission only approved equity crowdfunding for Title 4 — so-called Regulation A+ — companies like Dubuc Motors in March 2015. Qualified companies are then able to raise up to US$ 50 million a year, which is a far cry from the maximum $ 1.5 million in equity crowdfunding also approved last year in several Canadian provinces, including Quebec. So far, only one company has completed a Reg A+ equity crowdfunding campaign: another vehicle maker called Elio Motors, which sold US$ 16 million in equity to build a threewheeled gas- powered car.