Equity Crowdfunding, highlights weird and wonderful nature of investment

Crowdfunding has by now emerged from obscurity and is garnering mainstream awareness as the likes of Kickstarter and Indiegogo begin to churn out record-setting projects that have gained the attention of major media outlets.

A new development I was completely unaware of until reading Frank Cifaldi’s article on Gamasutra is Equity Crowdfunding, a European service which appears to be gaining steam as a platform for Venture Capital (VC) investing in game development. When I first started using Kickstarter, I recall thinking that it would be great to have the ability to establish such a cooperation mechanism, as I really have no use for extra USB keys or a new fanboy mug. Cifaldi efficiently explores some of the pros and cons associated to the concept.

What I did find interesting, and wholly unrelated to the article’s game development aspect, are the issues relating to VC in North America. In order to take part in such investment, one needs to be registered as a “qualified investor“. Key criteria for a Canadian to be deemed as such are:

  1. an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000; or
  2. an individual whose net income before taxes exceeded $200,000 in each of the two most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year; or
  3. an individual who, either alone or with a spouse, has net assets of at least $5,000,000; and
  4. a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements.

Basically, one needs to be rolling in dough to be deemed capable of funding an activity with the hope of making money from it. This certainly reinforces the adage that it takes money to make money.

I guess I’m going to have to up my game at the lemonade stand this summer.

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