We post here an email presented by the CEO of Syndicate Room calling for the equity crowdfunding sector in the UK to get its act together and grow a pair – before it is too late. We along with Goncalo, have been saying this for years – it is time for some action.
Equity crowdfunding has an enviable track record. More than 300 businesses have been funded to the tune of over £140 million in the UK alone. This puts innovation in the UK at an advantage over the rest of the world and there can be no doubt that this type of investment has been great news for entrepreneurs.
However, the last few days have seen the UK’s equity crowdfunding ship hit choppy waters:
- The Financial Times: Rebus becomes largest crowdfunded failure (or Google “Rebus becomes largest crowdfunded failure’ and click on the top link, to get around paywall)
- The Times: Crowdcube uses neat trick to fool investors
- The Sun: In with the wrong crowd (you will need to scroll down to the article)
In response to these articles I want to repeat what I have been saying for years. For equity crowdfunding to be sustainable, it has to work for investors. As an industry, it has to be profitable for investors. This has been my belief from the beginning and I have built SyndicateRoom on these very principles.
- Access to the same deals as the professionals. That’s access to the same deals in which the professionals are investing. No longer will such deals be closed to online investors, available only to a privileged class of professional investors
- Fairness. It shouldn’t matter if you’re investing £1,000 or £1 million, online investors must enjoy the same economic benefits as professional investors, institutions and any other ‘big boys’ in the round. On a £1-per-£1 basis, all investors, big and small, should make or lose the same amount of money, equally sharing both risk and reward
- Transparency. It’s vital to provide as much information as possible to enable investors to make a well-informed investment decision, and to continue that transparency through the life course of a funded business
I call on the wider industry to embrace similar best practice to ensure we all deliver on the huge promise of this exciting new asset class. As an investor, carry out your due diligence not only on the company in which you’re considering investing but also on the platform, and support those you believe are fighting the good fight.
All the best