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Using social media to raise money for businesses is a growing trend. In Washington last week, U.S. President Barack Obama signed the Jumpstart Our Business Startups (JOBS) Act that calls for new crowd-funding provisions. The latter allow small startups to bypass financial markets and traditional methods of attracting investment and sell small amounts of equity in their businesses to large pools of individual investors.
Companies are free to raise up to $1 million annually through crowd-funding methods.
In this way, an early stage company that needs $100,000 to expand should be able to reach out on the Internet and collect $1,000 from 100 average Americans, instead of trying attract money from banks or other investors. Those who invest in the new startups will be given shares in a business that could become the next Facebook or Google. Investors would be free to sell their shares at a later date should the company seek additional investment or move forward with an initial public offering…
There is a growing call for Canada to adopt similar legislation, allowing Canadian startups to raise funds more easily and preventing the best and brightest new companies from moving to the U.S. to attract cash.
Leading the campaign is the Canadian Advanced Technology Alliance (CATA), which is trying to rally the federal government (i.e., provincial regulators) to change Canadian investment laws to prevent a mass exodus of startups.
Dombrowsky said the government needs to move fast because the exodus is already beginning…
Dombrowsky is confident that IdeaVibes Crowd Engagement platform is well prepared to help Canadian companies raise the funds they seek through social media, once the practice is allowed by Canadian legislatures.
“Lots of Canadian companies are already using Kickstarter and they have been for years. They just go through the hoops of using a U.S. address,” said Dombrowsky, saying the Canadian government can no longer ignore the issue of using social media to help startups raise capital. “It’s got to happen because the reality is, startups will go to where the money is. This country already has a problem with raising funds for startups.”
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