MONTREAL, July 31, 2015 /CNW Telbec/ - A group of entrepreneurs and an angel investor have just launched Gotroo.com, a platform that puts entrepreneurs looking for financing in contact with investors from the public at large, whether they are qualified or not. With Gotroo.com, a company can register with the platform and reach a financing objective of up to $250,000 built on a maximum of $1500 per investor.
Gotroo.com has nothing to do with the current offer of crowdfunding sites, which give users the chance to buy a product or service in the form of presale, without any actual share ownership in the company. Gotroo.com makes equity crowdfunding possible—by issuing debt securities (such as bonds) or a participation that give users the right to a portion of the eventual profits (such as shares) to subscribers (an investor) from the public at large. This type of crowdfunding is authorized by the securities regulators in the participating province or territory where the business or investors are located.
With the Gotroo.com platform, businesses can maximize their chances of success by having access to qualified investors acting as lead investors or sponsors and by making full use of tools that will help them secure their financing.
The financing process of the Gotroo.com platform meets the standards and criteria of Multilateral CSA Notice 45-316 (Start-up Crowdfunding Registration and Prospectus Exemptions), issued by the Autorité des marchés financiers in Quebec and the securities regulatory authorities in five other provinces. The AMF and the Nova Scotia authorities have given Gotroo.com its official go-ahead with its prospectus and registration exemptions for crowdfunding of start-up businesses. The provinces of British Columbia, Saskatchewan and New Brunswick are also in Gotroo.com's sights.
Gotroo.com innovates by making it possible for entrepreneurs in need of capital (up to $250,000 twice a year) to issue shares of their business on the Web to investors who will then become part owners of the business.
Here's an example from the Autorité des marchés financiers site to illustrate how it works:
"Valérie has a brilliant idea. She has developed a soft drink flavoured with maple syrup and other local products. She has prepared a detailed business plan and hopes to turn a profit from her business venture. She thinks there is a market for maple soft drinks in gourmet grocery stores, bars and restaurants. She wants to begin production. She needs $75,000 in order to bottle and market her soft drinks. She applied to a financial institution for a loan, but was refused. She is thinking about raising the funds she needs by issuing shares through a securities crowdfunding campaign."
It's not the stock exchange
What's important to understand is that the shares purchased come from private companies, not publicly traded ones. Which means that it isn't possible to resell the shares acquired as you would on the stock exchange. The shares will be subject to the agreement between shareholders that governs the shares, for every business.
- An investor cannot invest more than $1,500 per company, either by credit card or electronic funds transfer.
- An investor can invest in as many companies as he/she wants.
- If you are a qualified investor according to AMF standards—i.e. a person with an annual income of over $200,000, a family income of over $300,000, financial assets of over $1 million or total net assets of over $5 million—, you can act as a lead investor or sponsor and have no limit on your investment. See Regulation 45-106 on the AMF site for more details.
An injection of new capital in Quebec and the rest of Canada
There is very little business start-up capital in Quebec and the rest of Canada. With Gotroo, companies self-finance via ordinary people and then share the profits with them. Though it represents risks for investors, a great investment is always possible—something that doesn't happen on other kinds of crowdfunding portals. At best, all you might receive is a product purchased in advance or a gift, and your money can in no way earn a profit when the company grows.
Gotroo.com in brief
Gotroo.com was created by an experienced group of Canadian entrepreneurs and investors who want to help companies and investors prosper and stimulate the Canadian economy.
Its main directors are:
Robert Brouillette, lawyer, engineer, patent and trade mark agent, entrepreneur and angel investor
Philippe Brouillette, lawyer, engineer, trade mark agent and entrepreneur
Board member and secretary:
Benoît l'Archevêque, serial entrepreneur
Image with caption: "Gotroo.com (CNW Group/Gotroo.com)". Image available at: http://photos.newswire.ca/images/download/20150731_C1549_PHOTO_EN_467567.jpg
For further information: To find out more about Gotroo.com, contact: Benoit L'Archevêque, (514) 370-2248, extension 223