The best UK crowdfunding sites
We take a look at the big names in crowdfunding including Crowdcube, Seedrs and SydicateRoom and how to invest.
We’ve all watched Dragon’s Den and passed judgement on whether we would invest given the opportunity. These days, thanks to the success of crowdfunding websites, you can be your own dragon.
Crowdfunding websites allows start-ups and existing businesses to publish details of the project they need finance for, how much money they need and what the investors will get in return. Investors can then decide if and how much they want to invest. Find out more in our guide: What is crowdfunding?
If you’re interested in giving crowdfunding a try these are some of the big names you should be looking at.
Crowdcube
One of the oldest crowd funding websites Crowdcube gives you the opportunity to invest in a wide range of businesses from clothing to smartphone apps to recruitment companies.
Many of these are established businesses pitching to expand or develop a side project.
Pitches on the website include a business plan, video and details of exactly what the company wants your money for and what it will give you in return.
Businesses on the website will have been vetted by Crowdcube.
How to invest
You need to join the website, which is free, then you can read through the pitches and ask for further information from the businesses.
If you want to invest you can put in as little as £10. You will then receive a share certificate if you opted for an equity investment or a bond certificate if you chose a mini-bond.
If a pitch fails to reach full funding no money will be taken from you.
A popular pitch on the website at the moment comes from Vibe Tickets, a finalist in the Virgin Media Business ‘Voom 2016’ competition, which wants to raise funding for an open ticket marketplace and is offering 10% equity to investors.
Seedrs
Another of the older crowdfunding sites is Seedrs, which focuses more on early stage, hyper growth businesses.
Entrepreneurs pitch to the website and Seedrs makes sure statements are “fair, clear, not misleading, and we verify all factual claims.”
Fully funded projects include a company hoping to be the AirBnB of workplaces and an email programme for three-year-olds.
How to invest
Seedrs offers three ways of investing: equity, funds and convertible.
Equity is straightforward, you can invest as little as £10 in a business in return for A Grade shares with voting and pre-emption rights in that company. Funds allows you to invest across multiple businesses with shares in each with a minimum investment of £100.
Finally, there’s convertible campaigns. This is where a company wants to raise money but doesn’t want to put a value on its business yet. You invest today and that investment is converted into equity in the future at a discount compared to other investors, which is your reward for taking that risk.
Many businesses raising on Seedrs are eligible for the Government's Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) schemes for UK taxpayers, meaning that UK investors can claim up to 50% in tax relief.
If you earn a profit on your investments Seedrs takes a 7.5% fee.
According to its latest report, the platform-wide internal rate of return at Seedrs is 14.44% on a non-tax-adjusted basis.
SyndicateRoom
SydicateRoom looks for investors to meet the final bit of money that a company needs to raise after big investors have bought large stakes already.
So, a lead investor must contribute at least 25% of the funding a company is looking for with other investors making up the remainder.
Given that the company has to get that large individual investment before they list on the website these pitches have a greater chance of hitting their funding target.
Opportunities currently on the website include funding a film, a gaming app and business software.
How to invest
Join the site, read the pitches, send questions and then if you want to invest you can buy equity in the business.
You have to invest via a Selftrade account which come with a lot of fees including a £12.50 fee per trade and a £8.75 a quarter inactivity fee.
Word of warning
Crowdfunded investments are not covered by the Financial Services Compensation Scheme (FSCS). The FSCS is a Government-backed safety-net that covers up to 100% of the first £75,000 of cash deposits per person per institution.
With no protection from the FSCS any money you invest using a crowdfunding website is at risk.
Read about the dangers, tax implications and more in: What is crowdfunding?
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