1. What are equity crowdfunding platforms?
Equity is the ownership of the shares (or ‘stock’) of a company, which grants its owner the right to a share of the financial return of the business, through income (dividends) or proceeds from the sale of those shares.
Crowdfunding is the act of raising finance for a business, project or property from a large group of smaller investors. The invention of the web and the development of technology platforms have enabled crowdfunding to occur quickly and economically.
Equity crowdfunding is a financing round, usually hosted online, where everyday investors can subscribe to buy some shares on offer. If the crowdfunding targets are met and the funding round is ‘successful’ then the transaction is legally processed and via a number of legal routes, the subscribers are now shareholders in the fundraising company.
Equity crowdfunding platforms are the online spaces that bring together businesses and investors and (to different extents) facilitate most of legal procedure of raising funds as a company.
2. Why do companies crowdfund?
From a companies’ perspective, a crowdfunding platform can offer the best of all worlds.
A company need only deal with a single point of contact (the business liaison working for the platform) and yet can benefit from the scale of hundreds of thousands of investors. This provides the output of a large fundraising campaign with the efficiency of a private fundraising managed through a single organisation.
The valuation a company will receive for shares sold via crowdfunding platforms will usually be equivalent to if they had sold exclusively to the best Venture Capital Trusts or angel investors.
Indeed, crowdfunding campaigns often take place alongside institutional investors, and the pitch will usually take pains to highlight if the price is equal for the professional and not-so-professional investors.
3. Complete list of UK equity crowdfunders
That’s enough of the theory, let’s take a look at some of the best crowdfunding platforms in the UK. The basis of this list is the full list of members of the UK Crowdfunding Association (www.ukcfa.org.uk), together with other prominent crowdfunding websites which aren’t members. We’ve excluded crowdfunding platforms that specialise in peer-to-peer lending or debt to focus on those offering private equity opportunities.
This equity crowdfunding platform list is sorted A – Z:
- Abudance Investment – www.abundanceinvestment.com
- Axiafunder – www.axiafunder.com
- Crowdcube – www.crowdcube.com
- Downing Crowd – www.downingcrowd.co.uk
- Envestors – www.envestors.co.uk
- Funderbeam – www.funderbeam.com
- Seedrs – www.seedrs.com
- ShareIn – www.sharein.com
- Triodos Crowdfunding – www.triodoscrowdfunding.co.uk
