SVX Canada

Spotlight

In Toronto, a Long-Awaited ‘Social Stock Market’

Anne Field | December 11, 2017

Facebooktwittergoogle_plusredditlinkedinmailFacebooktwittergoogle_plusredditlinkedinmail

Social impact investment platforms are cropping up to help connect investors with investment opportunities. The latest, a platform for accredited and unaccredited investors called Social Venture Connection (SVX), recently launched in Toronto.

An earlier version of SVX,  introduced four years ago, served accredited investors only. “We really see this as a game changer for impact investing in Canada,” says founder Adam Spence, who estimates there are about 25,000 social enterprises in the country.

The site is akin to investment platforms in the U.S., such as ImpactUs, a broker-dealer site that features a mix of impact investments, including CDFI loan funds and at least one direct investment opportunity in a nonprofit, for mainly accredited investors.

The new site—which Spence dubs “SVX 2.0.”—launched with a dozen investment opportunities, including debt and equity and nonprofits and for-profits. They include First Nations Bank of Canada, which aims to raise up to $7 million from for its portfolio of loans to Aboriginal-owned businesses; the Immigrant Access Fund, which provides micro loans to help immigrants pay for licensing and training so they can work in their field; EarthShield, an agtech startup developing an organic sprayed bio-resin to help farmers boost productivity, reduce costs and promote a healthier ecosystem; and Lucky Iron Fish, a social enterprise that makes a cast-iron cooking tool providing dietary supplementation to people with iron deficiency.

SVX Canada
Adam Spence of “social stock market” SVX

Spence first hatched the idea for a social stock market in 2007.  At that point, the concept of impact investing was new—so new that it took him many years to get a plan ready for regulators. In 2013, the first iteration of SVX was launched as a matchmaking database, but not for the general public. It has worked with about 150 ventures and funds, raising over $100 million in financing.

Canadian Crowdfunding

At the same time, Spence, along with many other parties, worked with Canadian regulators on changing the rules to allow for investment crowdfunding and new private placements. All the while, he says, “We were preparing our processes and business model to be ready for the changes.”

In 2016, new rules similar to the Jumpstart Our Business Startups (JOBS) Act of 2012 in the U.S. came out allowing for crowdfunding and other market innovations, while also permitting SVX to register as the equivalent of a broker dealer—what Canadian regulators call an Exempt Market Dealer, because they can offer investments not available on the Toronto Stock Exchange or other public stock markets.

Related:  Canadian Crowdfunding Industry Poised for Take-off

Can Tax Incentives Jumpstart the JOBS Act?

Canada Moves Ahead With Investment Crowdfunding

Impact Investing Marketplace ImpactUS Launches First Four Offerings

With new financial tech making it possible for regular people to conduct transactions online, plus growing interest in the social enterprise and impact investing market, Spence figured it was time to make the leap to version 2.0.

The result is a platform open to a wider array of Canadian investors and entrepreneurs, with something for everyone. “We now have a single access point for 100% of investors,” says Spence.

How it works: Investors sign up online, identifying how much they want to place in a particular investment and sign off on the appropriate securities documents. If, after a conversation with SVX, it’s determined there’s a fit, the transaction goes through. As for issuers, they have to be approved by several review teams before they can be listed.

An initiative of the MaRS Centre for Impact Investing, SVX is a nonprofit based out of the MaRS Discovery District, an innovation hub in Toronto.

Anne Field is a New York-based journalist who writes about social enterprise and impact investing. A version of this article originally appeared on her Not Only For Profit blog on Forbes.com.

Facebooktwittergoogle_plusredditlinkedinmailFacebooktwittergoogle_plusredditlinkedinmail

Tags: , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *