Budding investors have been warned to be on their guard against Dragon’s Den-style ‘crowdfunding’ ventures.
Experts fear that thousands of people could be left “high and dry” unless tighter controls on the practice are put in place.
Crowdfunding appeals to amateur investors because it gives them the chance to own a stake in a new business without a significant outlay.
Investment opportunities are usually marketed over the internet by companies unable to secure funding through traditional lending channels.
But the system remains largely unregulated and an increasing number of questionable ventures are appearing online.
It means novice investors could be at risk of losing their life savings or being financially exploited by unscrupulous scammers.
The warnings come just weeks after Crowdcube became the first equity crowdfunding platform to come under regulation by the Financial Services Authority (FAS).
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