Emils Kerimovs, a specialist in the financial services industry, claims there is a huge rise in fintech in Canada and that crowdfunding will be at the heart of it all. “This is about way more than raising money.” Technology, data, and regulatory changes will ultimately come together to disrupt the entire financial landscape in Canada. He believes the Canadian crowdfunding space will grow to be over $4 billion; more importantly, it will be a different means of fundraising, an incredible chance to democratize capital access, and the next phase of disruption for Canadians.
Crowdfunding Marketplace Is Evolving
In Kerimovs’ view, the era of the generalist crowdfunding platform is over. The future is specialized, niche crowdfunding platforms focusing on defined market segments. Rather than sift through a plethora of companies, investors will only care about platforms’ passion for their focus area. It could be sustainable energy, biotech, or real estate. This niche, specialty platform will create a better, predictable ecosystem that creates a “squeeze out” of generalist platforms, and the job creators and investors will operate in fields of deep expertise. This narrow attention will be a game changer that will sync capital with opportunities, instead of all the companies’ hopes, dreams, and objectives.
This is not just a theoretical exercise; this is happening right now. For instance, real estate crowdfunding grew by more than 30% in 2023 in the US, and single-sector platforms in health and entertainment are also growing exponentially. Kerimovs believes, “This evolution will continue to grow exponentially and will lead to a more rounded and sophisticated crowdfunding ecosystem.” The lesson for Canadian entrepreneurs and investors is: specialization vs. generalization is everything.
The Disruptive Power of AI and Data
The future vision of Emils Kerimovs extends to high-level data analytics and AI. Dating back to the sheer volume of crowdfunding campaigns, there will be a need for smart investing using AI. AI, and where applicable machine learning (ML), can sort through massive amounts of data regularly, notice complex trends, and evaluate the probabilities of a project being successful, often better than a person can.
AI can take action in three significant ways:
- Predictive Analytics—AI can evaluate market drivers, the history of a business team or pre-revenue company, and sometimes subtle social indicators of the project’s campaign to select the project most apt to succeed.
- Due Diligence—AI can automatically call out red flags, lapses in information, and risk factors that are otherwise nearly impossible to catch in manual reviews.
- Investors Matching—Matching algorithms can match investors to projects in ways determined by the investor’s risk appetite, investment goals, and personal choice.
Artificial Intelligence does not replace humans; Artificial Intelligence and humans collaborate on reasoning and come together to form a more precise, more nuanced, more fair, and ultimately more efficient investment process. In the Canadian fintech landscape, Artificial Intelligence could create a safe and intelligent, centralized crowdfunding environment that generates trust and investor confidence and is supportive of capital allocation in this ecosystem. The AI market in the finance industry is expected to reach an astonishing $65.6 billion USD by 2024, demonstrating the progress and influence of AI technological advancement in this space.
Creating a Fintech Denominated World
Emils Kerimovs suggested that all Canadians are hopeful for clear regulatory guidance in the fintech ecosystem. The continuity of the regulatory approval framework has not been achieved, hindering the potential of an ecosystem startup that provided citizen-based value from a proper regulatory framework in one province as opposed to historical provincial silos with no regulatory approval. With harmonization and regulatory modernization, at least for now, maybe the future is brighter.
The Canadian Securities Administrators (CSA) are moving in a direction to create exemptions to registration requirements to enable ecosystems startups to be able to raise money through crowdfunding. These are huge, yet Kerimovs states that there is much work to be completed. He outlined a national fintech roadmap with a commercialization vision:
- Technology-Agnostic Regulation: Regulatory regimes that are not eaten up by incumbents or tech innovations as a standardized way of governance to create stability while the tech will change.
- Risk-Based Framework: A regulatory multi-level regime that doesn’t over-analyze the incumbents with regulatory scrutiny while allowing the newest companies to innovate and build as they will without regulatory governance.
- Open Banking: Consent-based access to banking and consumer data in order to create competition and consumer-based value in our finance ecosystem.
If Canada employed this model, we could create an indirect innovation corridor while picking the low-hanging fruit in the crowdfunding space. The $4 billion dollar goal is very achievable if we capitalize on government technological capability regulation. The future of finance is immediate, and Canada could be the leader!
