Crowd-Funding Canadian Small Business

Much is written and debated about lagging productivity or innovation within Canada. During its current mandate, the Harper government reduced the corporate tax rate to 15% from 22%, in hopes of igniting corporate investment in capital equipment, new hires, market expansion, or research and development.

But, as Mr. Carney, our soon-to-depart Bank of Canada governor eloquently put it, “the dead money” has instead remained firmly in cash positions for most corporations, leading to our current malaise. Any strength in economic performance we exhibited since 2008, is better explained by the relative poor performance of our G8 partners, than any particular growth by Canada.

One can argue that true, paradigm-shifting innovation, and not the diluted version generally accepted today, more often happens at the small business level, where entrepreneurs not beholden to stockholders nor preemptive processes, are willing to take risks with ideas. Ideas that require capital. Capital that our risk-averse banks do not lend to small business, never mind their talk about Small Business initiatives. Capital that venture capitalists generally refuse to invest in early start-ups.

What if we could divert some of the monies from tax cuts or credits or grants that the federal government hands to corporations, into a new, secure Canadian crowd-funding web site developed by the Harper government, for Canadian small business.

For those unfamiliar with the concept, crowd-funding is the collection of individuals who pool monies together to fund a person, enterprise or in this case, small business or start-ups, via the Internet.

This being a federally developed site, using Canadian taxpayer dollars, the preference might be for an investment model, rather than one seeking donations. Similar to one that the Ontario Securities Commission recently consulted on.

The investment model would safeguard both individual investors and small business, with registration requirements, disclosure obligations, business plan or summary submissions, investment dollar limits, and potentially, a cooling off period allowing for both parties to step back prior to formal commitment. The site could eventually offer the option for revenue sharing or stock options, should the entrepreneur be so inclined.

The government could even offer new tax credits for those small businesses that successfully raised capital via the crowd-funding site, if for example, profit is achieved within the first eighteen months of business launch. Or special time-specific tax credits for new hires, or expansion to foreign markets, or reinvestment in Canada.

We could use this federally funded project to begin transition from a generic tax reduction model for all businesses, to one that links specific activities by small business prior to receiving tax credits.

A made in Canada solution that rewards small business when they develop innovative ideas to help improve Canadian productivity, while offering Canadian citizens better returns on their taxpayer dollars, and an opportunity to invest and grow their personal dollars.

If Rob Thomas can raise $2 million to produce Veronica Mars, the movie, on Kickstarter, surely we can use a federally developed Canadian crowd-funding site to encourage the next RIM, Hootsuite, Kobo, Arcade Fire or A.J. Casson.

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Caroline Kalaydjian

In 2005, I left the corporate arena to assist small and medium sized businesses capture their vast potential. I encouraged owners and managers to incorporate agility, creativity, productivity and efficiency throughout their business operations. Today, I marry my concerns for ethical business, politics, socio-economics, youth advocacy, poverty, social justice, and geopolitics with my first love, that of writing. Both as a freelance business storyteller, on Business Architect, and in everyday analysis on this site, I hope to shed light on the converging threads that bind society to the every-day impact of decisions made in the public and private realms.

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