Investor crowdfunding

Equity Crowdfunding Developments in the UK

UK Equity Crowdfunding Developments

Equity Crowdfunding Developments

For quite some time, portals in the UK and Europe have lead the equity crowdfunding revolution, while many other countries remain in limbo, spectating and waiting eagerly for a chance to do the same. Now, however, platforms in Europe face new regulatory challenges of their own in light of a proposal to communize crowdfunding rules. Although this proposal did not come into effect, it raised many questions as to how portals can expand and navigate the various countries and their governments in coming months.

Moving north, a few equity crowdfunding developments emerged in the UK last month as well, most of which were received with mixed feels. Although not applicable to traditional rewards crowdfunding, some argue the new rules restrict too many potential investors. At the front of these changes stand the notorious “10% rule” and the “appropriateness test.” On top of this, the Financial Conduct Authority (FCA) asks that all platforms explicitly outline investment risks. Although the industry boasts impressive earnings – more than 45 new equity projects per day since 2014, with a combined total of £2.4m successfully raised – over half of startups still fail, and investors must see this reality.

The 10% Rule and the Appropriateness Test

UK Equity Crowdfunding DevelopmentsThe UK’s most recent equity crowdfunding developments prevent investors from investing more than 10% of their net assets in debt and/or equity endeavours annually. As many industry spokespeople have pointed out, however, 10% can still devastate a person financially. Even without such regulations, first-time investors should not place that much money in a single investment. Portfolio diversity should come first, rather than placing all funds in a single startup, and this is one of the rule’s underlying objectives.

By implementing a maximum, it also forces new investors to realize the dangers of equity crowdfunding and helps them to learn the industry safely. At the heart of the regulation sits a need for investor education, and this is something many other countries have toiled with in recent months. To further this push towards awareness, the “appropriateness test” measures an investor’s crowdfunding competency, judging his or her understanding of the investments offered on certain platforms. Such regulations are not meant as deterrents, but rather precautions and learning tools.


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How much capital are

by MyThreeCents

We talking about here? And do you have a business plan or just an idea?
Depending o the amounts you need there are different approaches to how to get it. You could do a crowdfunding campaign in terms of online development like KickStarter or Indiegogo.
Also, are you looking for someone to just "donate" money to you? Don't we all wish! Or are you looking for an investor to give you a loan or be a partner with you in the company?

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