Crowdcube, one of the leading online capital-raising platforms in the UK, will now offer issuers the option to raise as much capital on their marketplace as they want with the advent of new Public Offer Platforms.
“a landmark moment for the UK’s entrepreneurial ecosystem.”
In the past, investment crowdfunding in the UK was limited by the prospectus hurdle. At €8 million, the funding round required a prospectus, a process that was time- and cost-intensive. This created a barrier for issuers seeking to raise more than that amount. As of January 19th, the new Public Offers and Admissions to Trading Regulations 2024 (POATRs) and the Prospectus Rule replaced the prior approach as the UK improves its private securities market
As of last month, “Public Offer Platforms” (POP) means that approved platforms are no longer required to file a prospectus for private securities offerings. This is part of a broader strategy of making the UK more competitive globally. As London is a key financial center and private markets have boomed, a streamlined capital-raising path can help both early-stage firms and investors access these markets.
Intermediaries must be authorized by the UK Financial Conduct Authority (FCA). Approved platforms must conduct mandatory due diligence on management and viability, and ensure the issuer has at least 6 months of working capital.
The FCA explains the change:
“As well as being easier for companies to raise capital in the UK and reduce costs, the final rules promote wider participation in capital markets for smaller investors and improve the relative competitiveness of our regulation compared to other jurisdictions. The rules include the new Prospectus Rules: Admissions to Trading on a Regulated Market (PRM) sourcebook and amendments to the Market Conduct (MAR) sourcebook for firms operating primary multilateral trading facilities (MTFs). We’ve also made amendments to the UK Listing Rules (UKLRs) as well as other consequential changes. The POP regime allows smaller and scaling companies to raise capital by offering securities outside a public market to a broad investor base, including retail consumers, while supporting our consumer protection and market integrity objectives.”
For investors, the issuer must provide standardized disclosure. The offering is open to retail investors, but there is an appropriateness assessment.
In a blog post, Crowdcube said it is operating under the interim permission regime as its application is reviewed.
The company described the change as “a landmark moment for the UK’s entrepreneurial ecosystem.”
“It levels the playing field, allowing private companies to raise the capital they need to become global leaders without being slowed down by outdated regulations.”
It is a fact that while public markets have slowed, private markets have grown rapidly. Both sides of this equation can be improved.
As technology has advanced to streamline the disclosure and investment process, online fundraising for private firms is clearly the future.
Excessive bureaucracy and costly compliance are a hidden tax on the markets that stifles economic growth. Supporting an innovation-driven economy creates jobs and prosperity and should be a policy priority for all central governments.
Smaller investors benefit from greater access to promising young firms that are not yet ready to trade on a public exchange.
This is a significant win for Crowdcube and the UK economy. As tokenization takes over, the private securities market and investment opportunities should accelerate. Changes to the secondary trading marketplace will foster a complete ecosystem, from primary offerings to investor exits.
New rules for the public offers and admissions to trading regime