The Innovators: FrontFundr opens up private equity investing to the public

The Vancouver-based fundraising platform is helping make crowdfunding legit.

Credit: FrontFundr

FrontFundr founder and CEO Peter-Paul Van Hoeken

The Vancouver-based fundraising platform is helping make crowdfunding legit

Peter-Paul Van Hoeken remembers what it was like when he founded FrontFundr in 2013. The Vancouver-based crowdfunding outfit sought to open up investing in private companies to the public, something more or less unheard of in Canada. Businesses were happy to see FrontFundr hit the market—it meant more opportunities for them. Likewise, small- and medium-sized investors appreciated the added options.

Professional investors and venture capitalists were a harder sell. “I remember going to an angel investor conference in the early days, and they were all sort of dismissive about it,” recalls Van Hoeken, who spent years at various financial institutions in Europe before coming to Canada. “‘Crowdfunding doesn’t work; what does the public know about investing?’ They were definitely skeptical of it, and they saw us as a new kid on the block.”

It’s easy for the CEO to remember, because even after funding 56 companies on the platform as of early fall, he still hears the same stuff. “I know there are still VCs that are participating on panels about capital-raising and will still dismiss it,” Van Hoeken says. “It’s their profession, and it’s such a small world, especially in Canada and Vancouver.”

Whatever the critics think, FrontFundr has reshaped how some people think about investing in Canada. Van Hoeken has overseen a diverse portfolio of businesses, from U.S. robot manufacturer Knightscope to Delta-based kombucha maker Bucha Brew. This year, FrontFundr saw the first initial public offering by a company that raised money on its platform when Victoria’s Very Good Food Co., a plant-based meat producer, debuted on the Canadian Securities Exchange at 25 cents a share.

Van Hoeken left Vancouver in 2018 to start FrontFundr’s Toronto office (which now houses six of its 18 employees) and, more broadly, to expand the firm’s influence. He thinks the Canadian investing market is vastly underfunded.

“At the end of the day—and I’ve run all the numbers—the pool of capital available for investing in startups in Canada is not enough,” he argues. “Angels and VCs can tell you whatever they want, but it’s not enough.”

He points to a study by the National Angel Capital Organization showing that, from 2010-18, angel investors had put just over $853 million into Canadian startups. “Compared to somewhere like the U.K. it’s way, way less,” Van Hoeken says. “There, 40 percent of companies raise through companies like FrontFundr, or they use them as an additional channel to raise money. If we really took advantage of crowdfunding in Canada, we could double the capital available for startups.”

Van Hoeken, who was born and raised in the Netherlands before moving here in 2010, knows how to use a Canadian analogy to make his point: “If we look where the puck is going, we don’t actually look at Canada because it’s just been lagging so far behind in equity crowdfunding.”