Regulation and Crowdfunding

I get asked a lot why we bothered to obtain the Financial Conduct Authority permissions that we did and what it means for CrowdBnk. We have always aimed to create an open and transparent crowdfunding market place and have taken the view that equity crowd-investing should fall under the supervision of the Financial Conduct Authority.  For this reason we sought, and have obtained through BriceAmery Capital, the necessary permissions to offer investment opportunities to the public and have based our model on a simplified PLC structure to allow entrepreneurs to issue shares to the wider public.  It took us over a year to devise a structure that would work under the currently regulatory regime.   

Open to Everyone

Without these permissions, CrowdBnk’s service would be limited to a small circle of high net worth individuals and sophisticated investors.  This is where we differ from other equity crowdfunding platforms, as we are able to serve the average retail investor looking to back a good idea in return for a small equity stake.  Most of our peers, on the other hand, are focused on high net worth individuals and sophisticated investors, which only effectively ‘digitizes’ the existing angel market. This has meant that a retail investor who wishes to invest small sums directly in such businesses can only donate the funds without sharing in the potential for that business to grow in value. We believe that small investors should also be entitled to receive shares in small businesses through low cost services, with the ability to diversify across many opportunities in order to manage the risk.

Keep it simple

Our objective is to develop a platform that is open to everyone while recognising the importance of a transparent and fair regulatory regime designed to protect both entrepreneurs and supporters. CrowdBnk is not in any way a party to the instruments that are agreed on its platform, or affiliated with the entrepreneurs whose shares are available but we are committed to ensuring a positive experience for everyone that uses our platform. We intend to demystify the fundraising process and provide entrepreneurs and their supporters with a simple, easy to understand process that removes the complexity surrounding building a successful company in the UK.

What the future holds

Over the next few months we expect to see further discussion on the regulation of the crowdfunding industry in the UK.  We believe that additional, clear and simple regulation is necessary at both the UK and EU levels to ensure that crowd-investment will be able to operate within a transparent and accountable system designed to provide supporters and entrepreneurs with a proportionate level of protection.