Financial Post  |  Denise Deveau | 13/04/17 4:01 PM ET

Despite the fact that small business entrepreneurship has achieved near-celebrity status, the reality is that not every startup can rely on a Dragons’ Den windfall to take its new business to the next level. The resources to take companies from the friends-and-family financing stages to the venture capital (VC) table are in increasingly short supply. And the inability to fund that transition is hampering Canada’s ability to compete over the long term.

For many proponents, equity crowdfunding could be a viable means to fill that gap and help entrepreneurs hold on long enough to capture the attention of VCs. A concept that has proven itself in the social orientation fundraising side of things in North America, equity crowdfunding is well on its way to being approved in the U.S., with hopes that Canadian governments will follow suit in short order.

Equity crowdfund investing combines technology and social media to raise small amounts of equity or debt financing from large numbers of online investors through designated, regulated portals. It’s a practice that has been approved in Australia and parts of Europe for several years.

The push to approve equity crowdfunding in North America can be attributed to the ongoing decline of venture capital funds for early stage companies, says Dr. Cindy Gordon, national chair of Invest CrowdFund Canada, a division of CATA (Canadian Advanced Technology Alliance), in Toronto. “If you look at private equity companies, they’ve gone upstream from seed players to Series A. They want to see $1-million in revenues. For early stage companies, access to capital is a big issue in this country.”

The VC front is definitely migrating out of the startup game, says Craig Asano, founder and executive director for the National Crowd Funding Association (NCFA) in Toronto. “In 2000, almost $6-billion was invested across 1,007 Canadian startups. Ten years later VCs invested only $1.1-billion in 357 Canadian firms. That’s an alarming trend.”

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