TestLab: Early-stage Capital

New and growing businesses contribute to economic growth, competition, and innovation in Ontario. These businesses create jobs, develop new and improved products and services, and find creative solutions that drive productivity. Early-stage capital helps these businesses start, grow, and scale.

Early-stage capital raising through TestLab

The Ontario Securities Commission (the OSC) is committed to ensuring that Ontario’s regulatory environment continues to meet the evolving needs of businesses, investors, and other market participants in Ontario. This includes balancing our newest mandates to foster capital formation and competitive capital markets alongside our longstanding mandates to protect investors from unfair, improper, or fraudulent practices, foster fair and efficient capital markets and contribute to the stability of the financial system and the reduction of systemic risk.

The OSC is testing a set of initiatives designed to support early-stage capital raising for Ontario businesses through OSC TestLab. These time-limited initiatives aim to take a balanced approach to improve access to early-stage capital while maintaining appropriate investor protections.


Ontario Instrument 32-509 Early-Stage Business Registration Exemption (Interim Class Order)

A dealer registration exemption for early-stage businesses: 

  • to engage in permitted promotional activities;
  • raise capital up to $3,000,000 from Accredited Investors and Self-Certified Investors without engaging a dealer.

The Angel Investor Group Registration exemption

Ontario Instrument 32-508 Not-For-Profit Angel Investor Group Registration Exemption (Interim Class Order)

A dealer registration exemption for not-for-profit angel investor groups, supporting their efforts to bring together angel investors and introduce them to Ontario early-stage businesses that are seeking capital. 


Ontario Securities Commission Rule 45-508 Extension to Ontario Instrument 45-507 Self-Certified Investor Prospectus Exemption

A prospectus exemption to provide new sources of capital for businesses in Ontario and increase investment opportunities for investors in Ontario who can adequately understand the risk of an investment through their education or work experience.


Form 32-509F2/45-509F1 Alternative Report of Exempt Distribution

A streamlined e-form to report distributions on a quarterly basis without an associated fee that is available to businesses that are relying on (i) the Self-Certified Investor Prospectus Exemption or (ii) the Early-Stage Business Registration Exemption and are raising capital without the use of a dealer.

Follow the applicable link below for detailed information:

Testing to accelerate learning

The OSC will be collecting information to help evaluate these initiatives and learn from the experience of stakeholders in Ontario’s early-stage capital raising ecosystem.

Each of the Early-Stage Business Registration Exemption, the Angel Investor Group Registration Exemption and the Self-Certified Investor Prospectus Exemption require that the participating businesses and angel investor groups report on their use of the exemptions. This mandated reporting includes information on the issuers and investors making use of the exemptions and the amount of capital raised. 

During the testing period, the OSC will also be inviting perspectives from the issuers and investors participating in these initiatives as well as other key stakeholders in the early-stage capital raising ecosystem. The data and information collected will help inform future policymaking including approaches to improving access to early-stage capital while maintaining appropriate investor protections.

How we got here? 

Over the past decade, the Commission has introduced new prospectus exemptions and amended existing ones to facilitate capital raising for businesses, particularly small businesses, while protecting the interests of investors.

In February 2020, the Government of Ontario created the Capital Markets Modernization Taskforce to review and modernize Ontario’s capital markets regulatory framework. The Taskforce’s final report was published in January 2021 and included a number of recommendations to better support access to capital for early-stage businesses.

The recommendations included, among others: (i) creating a “safe harbour” registration exemption for businesses and their associated persons, (ii) amending the registration requirements so that angel investor groups can work with their Accredited Investor members to encourage investments in early-stage businesses, and (iii) expanding the Accredited Investor definition to those individuals who have completed and passed relevant proficiency requirements indicating a high degree of understanding of investments and markets. 

Building on these developments, the OSC conducted research on access to capital for small and medium-sized businesses (SMEs) in Ontario’s private markets. This research identified (i) access to early-stage capital and (ii) understanding regulatory requirements as ongoing challenges for Ontario businesses.