TORONTO – Interactive Ontario (IO) is urging the Ontario Securities Commission (OSC) to approve proposed exemptions for raising capital in the province via crowdfunding. IO says it supports the exemptions as a means to increasing the available pool of capital for Canadian digital media companies. Crowdfunding empowers creators to raise public funds by publicizing their project using the Internet and social media sites.
Last April U.S. president Barack Obama announced the JOBS Act officially opening up crowdfunding as a new source of funding for small companies and startups. There participants can raise as much as $1 million a year without having to do a public offering, but final regulations are not yet in place. IO believes that if the OSC moves quickly enough to approve the exemptions, it would provide Canadian companies with a competitive edge.
“Canadian digital entertainment products are highly export-oriented and many Canadian properties have seen immense success outside of Canada in recent years,” said Interactive Ontario president and CEO Donald Henderson. “Giving companies the opportunity to access funding from investors across the globe will expand the capital pool and allow them to flourish even further.”
The interactive digital media industry in Ontario employs approximately 16,000 people; two-thirds of those are working at companies with ten or fewer employees.
Though Ontario has a supportive environment for interactive digital media that includes incentives such as the Ontario Interactive Digital Media Tax Credit, access to capital is an ongoing challenge for Ontario’s small-and-medium enterprises in this field, says IO. It notes that crowdfunding and capital were two of the most-discussed topics at IO’s recent conference dedicated to the business of games, GameON: Finance.
In particular, IO is supportive of OSC proposals to:
- limit the exemption to Canadian Issuers
- not impose any requirement to spend proceeds in Canada
- have a limit of $1.5 Million on offerings within any 12 month period
- allow the use of social media to direct investors to the funding portal or the issuer’s website
- limit an investor’s single investment to $2,500 and no more than $10,000 per year total
- impose no restrictions on the nationality of the purchaser
- impose minimal mandated information disclosure requirements
