Security Exemptions for Startups

Speaker 0: what are the common exemptions to security regulations that startups can leverage when raising early stage capital? well, good. that's a really good tie in actually to sort of what i just said. so the common exemptions, the most common is, as i just noted, the private issuer exemption. that's the most common. the friends and family exemption is also very common. the accredited investor exemption is very common. the equity crowdfunding exemption is relatively new. that was created in twenty twenty two, and and equivesto, my company, provided some feedback to the regulators on the creation of that set of rules. that's the first set of rules that easily allows private companies, potentially like yours, to raise from the general public in canada. so not only friends and family or high net worth investors, but everybody living in canada could invest into your company if they're over eighteen. so that is another one. there's also one called the offering memorandum exemption. now this exemption basically is where you start getting closer to being a public company in the sense that you do have to do ongoing annual reporting. you do have audited financial statements required and few things like that. but you can raise tens of millions of dollars from the general public, so that's getting a lot more intense. so not many startups necessarily use that. but that's similar to, like, a reg in the united states if people have been looking into raising in the us. there's also, something called the minimum investment amount exemption. so if somebody's investing over a hundred and fifty thousand dollars in their company, then you know, you can raise from them directly. there's not, additional limits. so there's thirteen different prospectus exemptions available to ontario based companies. i think the most frequently used would be the private issuer, the friends and family, a credit investor, and the equity crowdfunding, but there are a number of other ones also available. one of the newest ones actually, which is actually quite exciting, is called the self certified investor exemption. and what this does is it kind of fills in that gap between some of the most commonly used exemptions. right? so we've got the family and friends. so those are literally people who know you personally very, very well. a member of your tennis club doesn't qualify as a friend or family. they have to be, you know, your sister, your father, your mother, your child, or, like, you know, your best friend for twenty years type thing. you've got the accredited investor exemption, the angel exemption essentially for high net worth individuals. and then you've got the startup crowdfunding, the equity crowdfunding exemption, which is for the general public, but the general public can't invest huge amounts of money. so the benefit of the self certified investor exemption it basically says, are there people who wanna invest in your company who might have experience in their life or financial education that gives them the skills they need to assess a private investment opportunity, but they don't happen to have the two hundred thousand a year income or the million dollars in net financial assets, then they can still participate like an angel investor for up to thirty thousand dollars per year. so the self certified exam, exemption is new. in ontario, it's quite exciting. and it's essentially saying, are you an investor individual on your way to becoming an accredited investor, but you're not there yet? you can get started investing like an angel investor sooner using this exemption.