Earlier this month Crowdcube became the first equity crowdfunding platform to gain regulatory approval from the Financial Services Authority (FSA). Crowdcube is a forum that allows businesses to advertise projects they are seeking financial support for and, in return, give investors a share in the equity they own.
Online funding platforms use a range of methods to facilitate access to finance for small businesses and to fund specific creative projects. Methods include crowdfunding, where individuals contribute towards a particular project in return for specified rewards; crowd-investing, which enables investments in shares and other instruments; and peer-to-peer lending, used to facilitate simple loans.
Corporate law specialist Jennifer Malcolm of Pinsent Masons, the law firm behind Out-Law.com, said that the FSA’s regulatory approval of Crowdcube would inspire greater confidence amongst crowdfunding investors and have a knock-on benefit for businesses seeking access to finance.
“The FSA’s authorisation of Crowdcube should be a welcome green light for crowdfunding investors,” Malcolm said. “On one hand investors can now make direct equity investments into new businesses via Crowdcube’s website and on the other hand investors can take greater comfort that their investments are subject to adequate regulation and protection. This should lead to greater investor confidence in this innovative and important new source of funding for businesses.”
Read more at Out-Law.com