Equity Crowdfunding in Canada 2025

Updated March 2025 — bremo.io

Equity crowdfunding allows everyday Canadians — not just wealthy accredited investors — to invest in private startups and early-stage companies in exchange for equity. Canada's securities regulators have established a framework for equity crowdfunding that opens startup investing to a much broader audience. This guide explains how equity crowdfunding works in Canada, what platforms are available, investor limits, and what to watch out for.

How Equity Crowdfunding Works in Canada

Under the Startup Crowdfunding Exemption (National Instrument 45-110), eligible companies can raise up to $1.5 million per year from the public without filing a full prospectus. Individual non-accredited investors can invest up to $2,500 per offering, and up to $100 per year across all equity crowdfunding investments. Accredited investors face higher limits.

The process typically works as follows:

1. A startup lists on a registered equity crowdfunding portal with an offering document
2. Investors review the offering, including financials, business plan, and use of proceeds
3. Investors commit capital online, typically as low as $100–$500 minimum
4. If the offering reaches its minimum target, funds are released to the company and investors receive shares
5. If the target is not met, all funds are returned

Canadian Equity Crowdfunding Platforms

FrontFundr

FrontFundr is one of Canada's most established equity crowdfunding platforms, founded in 2014 and headquartered in Vancouver. It has facilitated investments in dozens of Canadian companies across sectors including technology, cannabis, food and beverage, and real estate. FrontFundr is registered with provincial securities regulators and operates nationally.

Crowdmatrix

Crowdmatrix is another Canadian equity crowdfunding portal offering investment opportunities in early-stage Canadian companies. It focuses on a curated selection of deals and provides investor education resources.

Equivesto

Equivesto operates as a Canadian equity crowdfunding platform with a focus on transparency and investor access. It provides detailed company financials and pitch materials to help investors make informed decisions.

Investor Limits Under the Startup Crowdfunding Exemption

Under NI 45-110, investment limits for non-accredited investors are:

• Maximum $2,500 per individual offering
• Maximum $100 total across all crowdfunding investments per calendar year

Accredited investors can invest larger amounts on the same platforms. Companies can raise up to $1.5 million per 12-month period under this exemption.

What to Look for in an Equity Crowdfunding Investment

Before investing, review the offering document carefully:

• Business model: How does the company make money? Is it proven or theoretical?
• Revenue and traction: Does the company have paying customers? What is the growth rate?
• Use of proceeds: What specifically will the raised capital be used for?
• Team: Does the founding team have relevant experience and a track record?
• Valuation: At what valuation is the company raising? Is this reasonable?
• Capitalization table: How much equity is already outstanding? How much dilution will occur?
• Exit strategy: How and when do investors get their money back?

Risks of Equity Crowdfunding

• High failure rate: The majority of startups fail. Expect to lose your entire investment in many cases.
• Illiquidity: There is no secondary market for most crowdfunded shares. Your investment may be locked up for 5–10 years.
• Dilution: Future funding rounds will dilute your ownership stake.
• Limited information: Startups provide much less disclosure than public companies.
• Fraud risk: Despite regulation, some companies misrepresent their situations.

Tax Treatment of Equity Crowdfunding in Canada

Equity crowdfunding investments are treated as capital property:

• Gains on exit are capital gains (50% inclusion rate)
• Losses on failed investments may qualify as business investment losses (ABILs) if the company is a Canadian-controlled private corporation (CCPC) — allowing deduction against any income, not just capital gains
• Some provincial angel tax credits may apply to eligible crowdfunding investments

Donation vs. Rewards vs. Equity Crowdfunding

It is important to distinguish between three types of crowdfunding:

• Donation crowdfunding (GoFundMe): No financial return; not a regulated investment
• Rewards crowdfunding (Kickstarter, Indiegogo): You receive a product or perk; not a regulated investment; not tax-deductible unless charitable
• Equity crowdfunding (FrontFundr): You receive shares; regulated by provincial securities law; capital gains tax treatment

Getting Started with Equity Crowdfunding

1. Register on a registered Canadian equity crowdfunding portal
2. Complete identity verification (KYC)
3. Browse active offerings and review offering documents
4. Start with the minimum investment amount to learn the process
5. Diversify across multiple companies to manage risk
6. Track your investments and keep records for tax purposes