A growing number of small British Columbia businesses are selling small ownership stakes to the public through online equity crowdfunding platforms, as an alternative to bank loans and venture capital.

The approach, reported by Business in Vancouver, sees companies raise money from many individual investors rather than a single large lender. Business owners cite a range of reasons, including building customer loyalty, finding financing when banks decline to extend more credit, and spreading risk among a wider group of shareholders.

Selling small amounts of shares to individuals can give entrepreneurs a better equity deal than selling to a venture capital firm, which may have the financial clout to dictate tougher terms.

A Distillery’s Million-Dollar Campaign

North Vancouver’s Sons of Vancouver Distillery has raised $1,045,240 from 206 individuals through the FrontFundr platform, with a further $278,640 being processed at the time of reporting. Its campaign ends in mid-December.

Lester, who was quoted in the report, said the 11-year-old company has proven its demand and is now looking for shareholders with a long-term view.

Loyalty, Plaques and Canning Lines

East Van Brewing is seeking to sell $250,000 worth of equity to buy canning equipment and launch new beer brands. Chief executive Steve Jennings said the brewery generates about $1.2 million in annual revenue. Investors in the brewery’s offering receive their name on a plaque inside the brewery, a small reward the company sees as a way to build loyalty.

East Van Brewing Company

Wildfire Recovery in the Okanagan

In the Okanagan, Coletta said money raised through crowdfunding helped expand operations at Garnet Valley Ranch Winery, which was hard hit by wildfires this summer, and finish a new tasting room at Haywire. She and her husband still own about 55 per cent of the venture, and the company is developing a redemption plan for its crowd shareholders.

The platform conducts due diligence on start-ups selling shares and advises them on how to price those shares, for a fee of $5,500, according to a company representative.

 

 

 

 

Photo Credit: Sons of Vancouver Distillery