Equity Crowdfunding checklist

Equity Crowdfunding gives businesses the chance to access lots of engaged investors. This checklist can help you navigate some of the common pitfalls, as well as help you decide whether the process is right for your business - before you start.

Please note - This checklist is not part of an application process for Equity Crowdfunding. However, we hope it gives you an idea of what is involved and what you need to do to prepare. Platforms may ask for more or less information about your business and the finance you need than what is set out below. This will change depending on individuals involved.

Equity Crowdfunding offers much potential. If your business has a funding need, you can raise funds from enthusiasts interested in your business success. Atuksha Poonwassie Co-Founder at Simple Crowdfunding

Stage 1: Understanding Equity Crowdfunding

Is Equity Crowdfunding right for you?

Do you understand the pros and cons of Crowdfunding? Do you understand the risks? Do you know how Equity Crowdfunding fits into the wider finance ecosystem?

Are you clear about what you want to achieve from the investment?

Do you know how much money you want to raise and why?

Are you prepared for a rigorous due diligence process?

Platforms will need to verify all the documents you provide.

Do you understand the costs involved?

You may have legal and adviser fees to pay as you prepare your documents. There are also costs associated with listing your business – like a listing or success fee. These costs can often be recouped through the raise, but make sure you are aware of them upfront.

Do you understand SEIS/EIS rules?

Will your raise be eligible for these rules? Do you understand how they can help you secure investment? 

Do you understand Prospectus rules?

Investments beyond €5m (c.£4.3m) currently need a Prospectus. This is a document that is signed off by the FCA. It takes at least six weeks and costs more money. If this could apply to your business, you need to be aware of it up front.

Have you researched different platforms?

Do you understand the differences between them? Have businesses like yours secured investment from that platform before? Does the platform you are considering have the correct permissions from the FCA?

Stage 2: Preparing your business for Equity Crowdfunding?

Have you prepared all your documents?

Depending on what stage your business is at, you may need to provide different documents. For start-ups, you may only have a concept and video. More established companies may need to provide accounts, a business plan and an audit. You must be happy for the platform to perform due diligence on these documents.

How will you manage your shareholders?

Are you prepared to manage your new shareholders yourself? Or do you want the platform to manage them for you in what is known as a ‘nominee structure’? You must be clear what the arrangement is and be prepared to put in the work of answering questions and managing stakeholders if that’s what you sign up for.

Do you understand what your chosen platform will and won’t do?

Different platforms will have different permissions on the support and advice they can offer.

Stage 3: Getting ready to list your business

Have you set a time-frame for the raise?;

You will need to set a time-frame or target amount for your raise.

Do you know how you’re going to sell your business?

How are you going to express what makes your business special? How will you respond to investor questions? 

Have you disclosed any existing investors? 

Any existing investors need to be disclosed, especially when you’re bringing them into the deal on the same terms as everyone else. 

Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

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