Regulatory changes at the beginning of 2016 opened equity crowdfunding up to more Canadian companies and retail investors. In the months since, a number of startups and growing ventures have sold small stakes to the public via online portals, though restrictions on interprovincial dealings mean they've largely used existing exemptions rather than the new rules.

What's Next for Equity Crowdfunding in Canada?

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During the peak of the last economic downturn, Brian Gracon found himself spending a lot of time at the mall. Stopping in to grab some food on the way back for meetings, he was surprised to see crowded parking lots and lines outside restaurants and nail salons.
 
"I wonder if there are any businesses that … are essentially recession-proof,"he recalls thinking. "It turns out there were many—from luxury car dealers to tattoo shops to nail salons to cosmetics companies." Gracon's research into these economically agnostic businesses inspired a theory he calls "Meconomics 101."
 
Gracon explains how business can insulate themselves from the market.

3 Tips to Make Your Firm Economically Agnostic

Whether they’re looking for it or not, there are plenty of people willing to bend entrepreneurs’ ears with suggestions and ideas about how to run their businesses. But not all advice is created equal. “Everybody has an opinion, and who’s to say they’re right?” asks Bruce Hunter.

Hunter does a fair bit of advising himself—as president of Lighthouse 360, he’s helped scores of companies create better business plans and put in place the structures necessary to achieve their goals. “In the very early stages of an organization’s growth, [you’re] trying to figure out which way to go,” he notes. Plenty of perfectly well-meaning people—family, friends, former colleagues—will add their thoughts to the mix as you’re trying to build a business plan. “[People will] give you 16 different directions, [but] you can’t chase them all—it’ll just confuse you,” he cautions. “You need to pick who you are going to listen to.”

In those early stages, it’s important to focus on achieving the plan you’ve developed for your business. “Certainly you need to pivot and you need to change if the market feedback suggests it, but it has to be steady-as-she-goes initially.”

Still, that’s not to say you should reject all external input. Advisory boards are a proven and popular way to harness the expertise of others, and Hunter says it’s crucial to fill the seats around the table with the right people. “A lot of people will choose their advisors because they have industry experience,” he observes. “The most important thing that I would look for is somebody with a breadth of leadership and management experience.” While the technical skills of a sector specialist can prove useful, entrepreneurs are often experts in their fields already, he says. Better to seek the help of someone who can provide strategic direction and insight for the business as a whole.

Who You Should Listen to When You’re Building Your Business

Everyone knows ‘a guy.’ You drop your phone, or it just stops working, and in an effort to avoid paying hundreds of dollars for a new one, you go to your ‘guy’ to get it fixed. But “it’s not a great experience,” says Donna Custance. “The word we hear most often to describe those places is ‘sketchy.’”

Custance is the co-founder and Chief Marketing Officer at Fixt Wireless Repair, which aims to supplant those ‘guys.’ The company has six locations in the Greater Toronto Area, with two more currently being built. Custance and her partners—all veterans of the wireless industry—see a big opportunity in standardizing and improving the mobile device-fixing process. “There’s over 40 million devices in this country if you combine cellphones and tablets, and at any given time it’s estimated that about 25% of them are either broken and in need of repair or replacement,” she explains.

Fixt aims to have 20 locations in the Golden Horseshoe by the end of 2017, and more than 80 across the country within the next five years. “We really believe that any market can sustain a number of these locations,” says Custance, noting that most Canadians have a device that might need to be fixed at some point.

Most service businesses looking to grow at such a rapid pace adopt a franchise model. Not Fixt. “There’s pros and cons to both approaches, corporate-only stores and franchises,” says Custance. “We felt strongly that corporate was the right approach.”

Here’s why Fixt isn’t franchising, and why similar businesses might want to consider doing likewise.

1. Keeping control of the experience
Custance marvels at how reliant most people are on their mobile devices. “I don’t know about you, but if I leave home in the morning and I’ve forgotten my wallet, I just keep going,” she says. “But if I leave without my phone, I definitely go back.” There’s even a word for it: Nomophobia, the anxiety that comes with not having your mobile phone.

3 Good Reasons Not to Franchise Your Business

Gaming is a $3 billion industry in Canada. The sector has seen successful titles from independent studios and the local outposts of multinational corporations alike. But while there are plenty of players in the space already, there’s always room for more, says Carly Beath. “The next big thing could come from a huge, established company, but it also could come from two people building a really wonderful game out of their apartment,” points out the senior operations manager for trade organization Interactive Ontario.

Digital media in the province is having a moment. The medium—which includes gaming, interactive educational products, and more—is well suited to the needs of other sectors. Beath points to healthcare and hardware companies who are looking to support their core offerings with smart, well-produced media assets. “Lots of big brands [are] here, and that means advertisers who want to do digital campaigns,” she adds.

Studios and agencies also benefit from the unique model of the medium. “Digital media companies are able to build fan bases and market research subjects before their products come out,” notes Beath. “Or [if] they have a track record of really great projects in the past, people will check out what they’re doing.” That allows studios to get immediate feedback from their fans and modify their offerings accordingly.

The quality of the talent and the strength of the ecosystem also help. “We have good educational programs here [and] really creative people,” says Beath. And while there are plenty of baby-faced graphic designers and game developers, the industry’s workforce actually varies significantly in terms of age and experience. “We get a lot of people who have expertise [and] have been around for a while,” says Beath. “They’re very willing to share their knowledge with younger people coming up.”

Companies often work together too. “People are really collaborative in this industry,” says Beath. “I don’t think you see [that] in a lot of other industries, the same way you see in digital media.”

The sector also receives plenty of support from the government, something that Interactive Ontario’s lobbying efforts seeks to maintain. Beath points to programs like the province’s Interactive Digital Media Tax Credit, as well as programs run by the Ontario Media Development Corporation and the Canada Media Fund.

Does a sector that needs so much help to survive deserve a place in the economy? Beath says the money is being put to good use. Companies “use the support available from the government to get off the ground, and then they’re able to fly on their own,” she insists. A lot of the names on the list of funding recipients change from year to year, she notes. “It means they’ve taken the money they’ve received and then gone on to build a company and don’t need it anymore.”

What's Next for Equity Crowdfunding in Canada?

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