Is crowd funding a viable option to raise funds and what are the things one should consider when crowd funding?

• Crowd funding are platforms created for the dedicated purpose of reaching out beyond your initial circle of people, and there are classified styles of businesses
• For startups, there are platforms to present your opportunity to a prime audience who are interested in investing. Tap existing networks of angel investors.
• On crowdfunding platforms, there are multiple things you can do:

1. Propose to raise equity – when you offer equity through a crowdfunding platform, you are at a certain level of development (most likely have a story as a business and have a trajectory for growth)
2. In Canada, there are specific crowdfunding rules. For instance, some firms register to raise more funds. You can raise up to $1500 without verification by a crowd funding platform. Alternatively, you can raise $5000 when verified by a registered crowdfunding business.

• *Talk to a lawyer to determine which regulations to use.
• Offer memorandum – friends/family or accredited investors can provide financing without having to put together an offer memorandum, however if you don’t have this option, another exemption to an offer memorandum is to use a crowd funding platform
• Always consult with a lawyer when raising funds outside your narrow circle.

Please tell us more about the pro forma statement, the versions for different levels of funding, including the highest that you’ve seen, and how ROI is stated.

• Pro forma statements reflect what your financial statements look like for the company at the time of investment
• This will be around a time when you are preparing financials for accounting purposes as well so the preparation of the term sheet will be up to date. This depends on the stage of funding
• ROI can be calculated separately

In terms of the ROI, would you include the social ROI (Impact funding for people, planet, profit) in the pro forma statement?

• Yes, especially if your business is social related. You want to demonstrate to investors that there is a market for it and that it is worth investing in
• If you can put in the triple bottom line, definitely do it 
• Especially during these times, people are investing more in the things that matter to them (what the aggregate return is; not the dollar return)

Is there an order or hierarchy to classify funding beyond friends and family? (Seed funding, round A, B, C…Z)

• Natural order of funding depends on the nature of the business and the levels of investment needed
• Typically when starting from scratch, and not having a sufficient story or reliable history of development, you cannot merely reach out to an accredited investor and ask for money. 
• When entrepreneurs have ideas, they tend to reach out in the immediate circles they know (friends/family). If the idea is sophisticated and you happen to have great contacts, you can consider going beyond friends/family to get a higher level of funding 
• Generally start with friends and family and gage their level of support. You can then build towards an angel investor round, and finally a venture capital round
• There are no rules to this but there are laws of nature that apply to this evolution of business

Question addressed to Mohamed: Given your background in the blockchain field, you are aware that many blockchain projects are hard to make money on except for ICO. Do you see any shot that they can raise equity funding?

• To date, it’s difficult to raise money in ICO. 
• There has been an upward trend (2017-18) in terms of raising money for ICOs
• From technology perspective, look into making it easy for early stage founders to raise money because these kinds of technology and tools such as ICOs can bring founders and investors together 

In terms of documents, from a founder’s perspective, what important elements should they need pay attention to?

• There will be a lot of going back and forth between the founder and lawyer concerning valuation (common interest for most people)
• Other things include:
  • Preemptive Rights – rights for investors to invest in the next round and possibly have the opportunity to invest in the next round first on the same terms as future investors
  • Anti-dilution clauses – future calculation of equity includes proportion of adjustment of existing shares 
• Consider the type of investor you’re working with (Are they easy to work with? – You will be developing a long-term relationship with them)