Toronto-based FrontFundr has announced that it has helped startups raise over $140 million across more than 100 fundraising campaigns using its equity crowdfunding platform.
The company reached this milestone after seeing record demand for its offering during the summer of 2022. FrontFundr’s growth has come as macroeconomic conditions have shifted amid rising inflation and interest rates. This environment has made venture capitalists and traditional angel investors more hesitant, which in turn has made it tougher for companies to raise venture capital funding via traditional means.
FrontFundr reached this milestone after seeing record demand for its equity crowdfunding platform in summer 2022.
To mark the occasion and build on this growth, FrontFundr is launching its own fundraising campaign on FrontFundr, which the company said will remain open to the public until November 4.
So far, FrontFundr has raised a total of $7.3 million CAD from over 900 investors. The company aims to raise another $2.5 million to $5 million through its latest offering to support its product development plans and boost its sales.
Founded in 2013 and launched in 2015, FrontFundr describes itself as “Canada’s leading online private markets investing platform.” Granted exempt market dealer status by Canadian securities regulators, the startup’s equity crowdfunding platform offers a means for private companies to raise capital via private placements.
FrontFundr does this by connecting these companies with Canadian investors “of all levels of investing experience,” allowing the latter to invest as little as $250 in under 12 minutes in privately-held companies they might not otherwise be able to support.
To date, FrontFundr has built a community of more than 30,000 users. The startup’s platform has helped Canadian tech startups like Manzil, Caary, and FrontFundr itself raise capital.
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According to FrontFundr, the startup saw strong demand this summer, reaching the same number of successful closes in August as in its entire previous record quarter. This came after investor activity on its platform rose by 25 percent quarter-over-quarter in 2022 as a whole, helping FrontFundr grow its own revenue 94 percent on a quarterly basis this year.
In an interview with BetaKit, FrontFundr founder and CEO Peter-Paul Van Hoeken said he believes that FrontFundr and the market for equity crowdfunding in Canada are both at “an inflection point.”
“That’s really exciting to see,” said Van Hoeken. “We’ve been really, I think it’s fair to say, a trailblazer in this space, and we’ve established Canada’s leading investment crowdfunding platform, so we want to solidify and build out our position in Canada.”
While use of equity crowdfunding has “gone mainstream” in the United Kingdom, and is picking up stream south of the border, its growth in Canada has been a bit slower up to this point, says Van Hoeken. The CEO attributed some of this to the country’s fragmented regulatory environment.
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But since Canadian regulators introduced harmonized crowdfunding rules across Canada, making equity crowdfunding more accessible, Van Hoeken has seen its popularity rise, especially as broader economic conditions have worsened.
“As interest rate increases restrict available capital, more founders and growth stage companies will be looking at alternative financing options to bolster their available capital options along different funding stages, from pre-seed and seed to Series A,” said Van Hoeken. “Investment crowdfunding offers founders an attractive and viable alternative or additional source of funding to traditional angel and VC investment. As a result, we’ve seen an increasing amount of funding raised through investment crowdfunding.”
Van Hoeken also sees a future where FrontFundr can help more public companies raise money using its platform. Over the longer-term, FrontFundr has ambitions to “spread [its] wings” across North America and into the United States.
UPDATE (21/09/22): This story has been updated to include commentary from FrontFundr CEO Peter-Paul Van Hoeken.
Feature image courtesy FrontFundr.