Geek Speak: Michael Volker, director of Simon Fraser University Innovation Office

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Technology entrepreneur and investor Michael Volker is involved in 100 or so companies, and he has some thoughts on what equity crowdfunding should look like in B.C.

Volker is the director of Simon Fraser University’s Innovation Office. The office helps SFU researchers commercialize the results of their work.

On May 29, Volker is slated to participate in a panel discussion called “How can Angels and VCs Capitalize on Equity Crowdfunding?” at the Canadian Equity Crowdfunding Conference in Vancouver. Organized by the Equity Crowdfunding Alliance of Canada, the conference will take place at SFU’s Morris J. Wosk Centre for Dialogue.

Volker will also speak about equity crowdfunding on June 2 at the Canadian Investor Conference. That conference will be held at the Vancouver Convention Centre.

The Georgia Straight interviewed Volker by phone.

What is equity crowdfunding?

Equity crowdfunding involves the sale of shares in the company to the general public.

Why is equity crowdfunding important to the technology sector?

The challenge for entrepreneurs is raising money, especially start-up money, and crowdfunding will allow entrepreneurs to raise small amounts of capital from a large number of investors.

What model of equity crowdfunding do you hope securities regulators will permit to happen in Canada?

I think the best form of crowdfunding is what the B.C. Securities Commission has been using for over a decade, and that’s called the offering memorandum. That allows a company to raise any amount from any number of investors. I believe that what’s being proposed with crowdfunding is a lot more restrictive than that. I think it would be better to have one exemption like the offering memorandum that can be used for several different purposes. I think that what we have in place effectively trumps all of the other proposals for crowdfunding.

The reason for that, I think, is because in Canada our securities are regulated provincially. So Ontario, for example, has never had the offering memorandum. So they’re now looking at a special crowdfunding exemption. B.C. is looking at Ontario and saying, “Well, if they have a crowdfunding exemption, we should have one too.” What B.C. should say is, “Well, we’ve always had this offering memorandum. Let’s just make it better.” We’ve got something that’s already in place. Let’s make it work better. Why aren’t people using it? What are the issues around it?

I can tell you some of the answers to that question. But that, in my humble opinion, would be a much better approach, and it would make British Columbia a leader in helping entrepreneurs raise their start-up money from the general public.

What do you do at the SFU Innovation Office?

I basically help students and entrepreneurs get new ventures started. Often they are the result of a research project or student project. But it all comes down to commercializing ideas—whether those ideas come out of a research lab or just jump into someone’s head. So my job is to work with entrepreneurs to help them build companies, put teams together, and raise a little bit of money from investors to get those businesses started.

How might equity crowdfunding change the funding situation for these projects?

If you’re talking about equity crowdfunding as it’s being proposed under this new exemption, I don’t think the impact will be profound. I think what it will do is it will let entrepreneurs raise money from people who otherwise would not qualify. But I don’t think it’s the right approach.

I think the better approach would be, as I mentioned, to use the offering memorandum exemption and fix it up. Because under the crowdfunding exemption, people think, “Oh, this is going to be really easy.” But in fact companies have to do certain things, and it’s going to be six of one half-dozen of the other. If they’re already going to have to do certain things that they otherwise wouldn’t do, I think it’s not unreasonable to expect companies to go further in providing things like information reporting to investors.

If you’re going to be taking money from investors, you have an obligation to those investors to keep them informed and to give them honest, reliable information about your company. That’s really what the offering memorandum does, and they’re talking about a similar type of document—perhaps a little less onerous. But I think if entrepreneurs want to ask strangers for money, they have an obligation to those strangers. I’m not sure that crowdfunding is going to make that much easier for them.

When people think crowdfunding, they think Indiegogo and Kickstarter. Are the kind of people who donate to projects via those platforms going to participate in equity crowdfunding?

Probably yes, because the problem with buying a product on Kickstarter, for example, is you get just the product. But if you like the idea and you want to participate in that idea, then the only way to do it is by owning shares in the company. Of course, everyone knows about the big success stories. You know, everyone has seen the Facebook movie, so people think, “Gee, if I could get in on the ground floor on the next Facebook, I’ll make millions of dollars.”

That’s what drives people into buying equity shares, which is really not any different than what we had here in Vancouver—well, we still have it today. But for 100 years, people have been investing in small companies on the old Vancouver Stock Exchange—now it’s the Venture Exchange. That’s really what crowdfunding is, because crowdfunding is selling your shares to the public. I can’t for the life of me understand why they don’t call it that. If the regulators are now saying you can sell to the crowd, what they’re really saying is you can sell to the public. So if you’re going to be selling to the public, then I think you have certain obligations. Crowdfunding, per say, isn’t the right answer.

You’re involved in a lot of companies. What technologies have your attention right now?

Mostly technologies in the green technology sector. I see that, with all of the concerns about climate change, as an emerging sector. In fact, we’re going to be hosting a green tech pavilion at the June 1 and 2 investor conference at the Vancouver Convention Centre. We’re calling that the PowerHaus Pavilion, and we’re going to have about 25 young companies that are doing interesting things in green technology.

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