For Business Owners
FrontFundr is a Canadian equity crowdfunding platform
This independent review has been written for startups & growing companies considering using FrontFundr to raise money with equity crowdfunding.
- What Is Equity Crowdfunding?
- Best Equity Crowdfunding Sites From Around The World
- How To Crowdfund A Business Through Equity Crowdfunding – Step-By-Step
In this FrontFundr review, you will learn about:
- FrontFundr’s Attitude To Curation
- Which Companies Can Use FrontFundr
- How FrontFundr Helps Business Owners
- What Is Unique / Different About FrontFundr
- How To Raise Money With FrontFundr
Platform Website: frontfundr.com
FrontFundr’s Attitude To Curation:
Equity crowdfunding platforms have divergent attitudes to pre-offer curation.
- Some platforms favor promoting more open access between startups and the investing public. They see their role as being facilitators rather than adjudicators, “letting the crowd decide” which companies are worthy of being funded.
- Other platforms prefer to have their internal team analyze the companies which come through their door, and find the ones which are most fit-for-funding before they are shown to the public. This is the “curated marketplace approach”. It closely mirrors the sort of work that angel investors / venture capital conduct before they invest.
FrontFundr sits at the highly curated end of the spectrum. Because investment into private companies is quite new in Canada, they believe they have a responsibility to conduct due diligence on the crowd’s behalf. Investment into private companies was previously impossible for all but 4% of the population, so there is still some way to go for the ordinary person to understand the risks involved with investing in early-stage ventures.
By qualifying the companies which apply to FrontFundr, they are able to provide an objective view and mitigate unnecessary risks. Only 9% of the companies which apply to FrontFundr make it through to go live on their platform.
Learn How To Succeed With Equity Crowdfunding
Equity crowdfunding offers amazing potential for startups and growing companies, but it is also a very steep learning curve.
In this step-by-step book, you will hear from the world’s leading platforms and from successful past crowdfunders from around the globe, with all their tips and tricks.
Learn how they did it, and how you can do the same.
Which Companies Can Use FrontFundr:
FrontFundr presents itself as “industry agnostic”. Everything from local main street businesses to highly-scalable startups will be considered. They see a particular strength with local businesses and mission-driven companies, as these have the best track-record of connecting with their community. Historically, the majority of investments on FrontFundr come through in the same location as where the company raising funds is situated.
However, companies need to have a reasonably easy-to-understand business model to succeed on FrontFundr. Equity crowdfunding is a publicity exercise, and would-be-investors need to know:
- How does the company make money?
- How can they hope for a return on their investment?
The answers to those questions must be straightforward enough for the general public to “get”. This requirement makes complex technology tough to do through equity crowdfunding.
FrontFundr primarily operates in the space ranging from post-revenue growth startups, up to pre-IPO companies. Pre-IPO companies have previously used FrontFundr to achieve shareholder spread requirements, prior to a marketplace listing.
Pre-revenue companies are not completely ruled out, but the company would need to show its strength in other ways – particularly, the size of their existing network / support group. If they have spent a lot of time successfully growing their crowd and operate in a very “hot” space, then pre-revenue might be possible on FrontFundr.
FrontFundr are licenced in 8 out of Canada’s 13 provinces / territories, so they are ready to help Canadian companies across a majority of the country.
In terms of their cross-border activity, companies incorporated outside of Canada may use FrontFundr, but their investor audience is strictly Canadian-only. All investors need to be Canadian residents for at least 6 out of the previous 12 months. With that said, FrontFundr is open to conducting cross-border campaigns in conjunction with platforms in other countries.
Raise Size Restrictions:
In Canada, up to CA$250,000 can be raised from retail investors per equity crowdfunding campaign, and companies may conduct up to two campaigns in a year. However, more money than this can be raised through a blended deal, utilizing other exemptions, such as accredited investors. This results in a typical equity raise size on FrontFundr of closer to CA$500,000 – CA$1 million per campaign.
In terms of minimum raise size, FrontFundr prefers to work with companies which are at the stage where they are ambitious enough to raise at least CA$250,000 (and have an equity valuation which supports that). However, lesser amounts will still be looked at, down to a minimum of CA$50,000.
Take The Quiz – Are You Ready For Equity Crowdfunding?
Equity crowdfunding can raise 6 – 7 figures of investment for startups & growing companies, without banks or VC.
But is your company ready to launch?
This short multi-choice assessment has been created to give an indication of whether your company is fit for funding.
All answers are kept completely confidential.
How FrontFundr Helps Business Owners:
FrontFundr is a crowdfunding marketplace. This means they help companies access investors they would not have reached otherwise. This is one of the main value-adds of a strong equity crowdfunding platform – a place for ventures to find new investors, beyond the crowd the fundraising company already has in their database.
Further, FrontFundr provides a campaign coach to help the companies get ready for crowdfunding. They will review the various materials and provide feedback and guidance. However, doing the actual work is still up to the entrepreneur. Think of a crowdfunding campaign coach as being similar to a personal trainer in the gym – they can tell you where to best direct your efforts, but lifting the weights is still up to you.
If fundraising companies want additional services done for them, FrontFundr can provide those introductions. For example, they have a connection with the best press-release service in Canada, and have negotiated a special deal for all fundraising companies who want to use it. FrontFundr also have relationships with all major Canadian press.
What Is Unique / Different About FrontFundr?
FrontFundr has three main points of difference:
- Personal approach. While FrontFundr wants to make the onboarding process as smooth as possible, companies and investors can always access a real human to respond to their queries, should they desire.
2. Curation. As mentioned earlier, FrontFundr’s attitude involves doing upfront work to decide which companies will be the best fit for their investor audience prior to launching publicly. If it’s not a great match for their platform, or the company would be better-advised to go down a different route, they let the company know upfront.
3. Range of capital raising options. FrontFundr also do debt crowdfunding, and have relationships with other platforms to help with fundraising for companies for whom equity crowdfunding is not the best fit (e.g. more complex business models, or less socially-sharable business models).
How To Raise Money With FrontFundr:
Here is how to increase your chances of succeeding with equity crowdfunding on Frontfundr:
- Self-assess your readiness. Before a company is investor-ready, they should first be business-ready. Do all you can to prove the business model, and demonstrate exactly how the additional capital raised through crowdfunding will be likely to help you scale up.
- Make sure you have enough resources to run your campaign. Equity crowdfunding can be extremely rewarding, but it takes plenty of work – so make sure you have the personnel on board to execute on the effort required. There is also a cost to raising capital, including legal fees, and money to spend on promotion. Show that you have budgeted for this.
- Get your house in order. Approach FrontFundr with a clean cap table and a robust shareholder agreement. These are often areas which are neglected in the hustle and bustle of growing an early-stage startup, but if you have that box “ticked” when you first approach the platform, it will make you stand out from the others during due diligence.
The final piece of advice is to learn from the best crowdfunding case studies so that you can replicate their success. Other companies have done crowdfunding before – you don’t need to learn from scratch. Absorb as much information as possible so that you are prepared to crowdfund!
You’ll learn how to choose the right platform, build a crowd, and raise game-changing money.
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