Investing your money can be a useful tool in growing your wealth and reaching financial goals and has the mutual benefit of allowing companies to raise capital.
However, Canada’s current investment landscape mostly focuses on allowing everyday people to participate in the public market — not private businesses. The downside of this is that Canadians lose out on the prospective gains of early-investing in promising, growing local businesses, and are only able to invest in companies once they’ve generated the revenue needed to go public.
But Canadian equity crowdfunding company FrontFundr is looking to change all that by simplifying access to private markets and championing new legislation that will help connect entrepreneurs and investors across the country.
Tuning into a popular investing show one evening, company founder Peter-Paul Van Hoeken was immediately inspired by the prospect of making it possible for everyday Canadians to become their very own ‘dragons.’
Van Hoeken’s philosophy is that anyone who believes in a business should have the ability to invest and become a shareholder from the very beginning. “FrontFundr opens up investment opportunities in private companies to everyone,” he says. By leveraging their platform, users can create a profile and complete a private investment in as little as 12 minutes and from as little as $250.
The company’s mission is to democratize Canada’s private markets so they’re not just accessible to accredited investors and venture capitalists. “Everyone will have the opportunity to invest from the very beginning in the next Uber,” the founder says.
In theory, this would allow everyday Canadians to get more out of their investments. Last year in North America, investments from private sources boasted, on average, three to four percent greater average returns than public ones.
Realizing this mission also means helping new companies and startups get off the ground. To date, FrontFundr has already built up a community of 17,000 investors across Canada and helped over 50 companies raise more than $40 million.
“Access to capital has been a challenge for startups and scale-ups. FrontFundr is unlocking an entirely new pool of capital for these companies” says Van Hoeken. By reshaping the relationship between investors and companies, regular customers can be empowered to help grow promising businesses with growth potential.
Before embarking on a rewarding (but challenging) move towards reshaping Canada’s financial landscape, the founder spent over a decade working in the banking industry in Europe. “I enjoyed my time in banking, but I knew that I wanted to move on and work in a more entrepreneurial capacity with the ambition to make a change in the finance industry,” he says.
Turning his idea into reality involved a rigorous journey of discovery, information gathering, and testing. Despite his ambitions, not everyone was a fan right out of the gate.
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“Being the new kid on the block with big plans to make an impact and change the neighbourhood doesn’t come easy,” Van Hoeken says. “Pioneering change in the established finance and investment industry – which is very closed, traditional, and subject to tight regulations – has been and still is very challenging.”
He continues, “What’s interesting is that some of those [detractors], in time, then went on to become shareholders and champions of our company.”
While the pandemic has come with its own set of challenges for many Canadian businesses, many of the private enterprises represented on their platform have witnessed record investment numbers. Canada’s own The Very Good Butchers, a plant-based meat alternative company, was even able to make its stock market debut during the pandemic.
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In many ways, Van Hoeken sees present circumstances as an opportunity for people to transition toward online private markets.
“Companies and investors had to rely on online solutions and have become more comfortable with transacting online. I think the pandemic has fast-tracked investment crowdfunding,” he explains.
That said, the unprecedented situation has prompted FrontFundr to spearhead a slew of initiatives to help Canadian investors and startups navigate uncharted waters.
Looking forward to what the future holds, the founder’s aspirations mirror other places, like the United Kingdom, that are years ahead when it comes to equity crowdfunding. But Canada, he insists, is moving in the right direction. “In five years’ time, I’d like FrontFundr to be the most trusted and recognized online private markets platform in Canada.”
As such, it appears his ambitions for FrontFundr are as expansive as those he holds for the startups fostered by his platform.
Interested in starting your own private investment portfolio? Head to the FrontFundr website for more information on how you can get started.