Canadian entrepreneurs seeking financial support got a boost Monday as the world's largest online crowdfunding platform officially moved north of the border.
New York-based Kickstarter launched in Canada amid a four-day visit to Toronto by co-founder Yancey Strickler.
Strickler says the company had long wanted to move into Canada but was kept away because of financial regulations.
Kickstarter's crowdfunding model, in which investors pledge cash toward a project or business in exchange for products and perks, only grants money to entrepreneurs if the entire funding goal is met.
If the target is not met by a set date, the money goes back to those who pledged.
Red tape held up Canadian launch
Strickler said regulatory red tape slowed Kickstarter's expansion into Canada.
"It's not specific to Canada," he said. "We have a very unique model. People are only charged if funding goals are met.
"As we expand into other countries, there's just a lot of work that has to go into place."
Kickstarter was founded in 2008 and has since raised over $775 million US for more than 48,000 projects.
Strickler said that while the Canadian crowdfunding scene is currently dominated by another platform, Indiegogo, he is confident Kickstarter will prevail.
Kickstarter claims it has raised more than six times as much money as Indiegogo has, while 40 projects have generated more than $1 million in pledges, versus only four for Indiegogo.
"The success rate, the people who use the site and the size of the community — pretty much every box you can check — Kickstarter is clearly a great service," said Strickler.
3,000 Canadian projects
A notable Kickstarter success story was the Pebble smartwatch project launched last year by Waterloo, Ont., native Eric Migicovsky.
The project to build a watch that wirelessly links to a smartphone raised $10.3 million within a month, and eventually garnered an additional $15 million through investors.
Prior to Monday's official launch, some Canadian entrepreneurs were accessing Kickstarter by skirting the registration rules. Canadians had to use American partners or U.S.-registered businesses to create a Kickstarter project.
There are now more than 3,000 Canadian projects seeking funding on Kickstarter.
The vice-president of research for the Canadian Federation of Independent Businesses, Doug Bruce, said in an email that Kickstarter's inclusion of Canadians is a significant step for small businesses. But he added that entrepreneurs would benefit if they could woo investors with the promise of equity in their company and not just perks.