Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
State of UK Equity Crowdfunding Entering 2025
Report | Jan 30, 2025
Image: State of UK Equity Crowdfunding (Beauhurst)
UK Equity Crowdfunding Remains Vital for Startups Despite Recent Decline
According to the latest Beauhurst post on "State of Equity Crowdfunding in the UK", £324 million was raised in 2024, tracking a notable decline from its peak of £773 million in 2021. The total number of crowdfunding rounds also dropped to 297 last year, the lowest on record since 2014. Despite these challenges, investment crowdfunding is still an essential funding source for startups, and new innovations are arriving to adapt to this reality and change investor behaviours.
Capital Raised Over the Last 10 Years
It's been over a decade since the crowdfunding sector hit markets to provide both companies and investors with access and opportunity to invest in private companies via regulated platforms like Crowdcube and Seedrs. The chart below shows the last decade in equity crowdfunding investment volumes:
- 2014-2018 - the number of rounds and total capital grew year over year reaching over £500 million annually by 2018.
- 2019-2021 - capital volume in 2021 with a record £773 million raised across 569 rounds.
- 2022-2024 - then the trend declined with a total of £324 million in capital being raised in 2024, likely as a result of regulatory tightening, and impact of brexit and covid
Why the decline?
Arguably, several factors have contributed to the downturn in UK equity crowdfunding, such as:
- Economic Uncertainty - Brexit has made investors more cautious. The uncertainty around trade, market regulations, and currency fluctuations has adversely affected the willingness of individuals to invest in riskier early stage ventures.
- Stricter Regulations - In 2018, the FCA proposed tighter rules for lending based crowdfunding platforms, requiring more investor protections, risk disclosures, and due diligence. These rules became effective in December 2019. While the new peer to peer lending rules were designed to protect investors, it also made it more difficult for businesses to attract funding,
Comparing UK ECF with VC
- Median funding round size in 2024 was £500k for equity crowdfunding vs £1.72 million for venture capital
- ECF investors include retail and angels vs institutional investors and high net work individuals for VC
- Equity crowdfunding is being being used by seed and early stage companies vs growth/scale-ups using VC (although this may change longer term)
- Many companies are not eligible or far enough along for VC backing. Equity crowdfunding is still a critical source of funding for early stage.
New Innovations and Incentives in UK Crowdfunding
New incentives and innovations are emerging to help rejuvenate the sector.
See: Public Market Challenges and Equity Crowdfunding Capital
1. Regulatory Adjustments for Easier Fundraising
The Financial Conduct Authority (FCA) approved changes last year after consulting on the new Public Offers and Admissions to Trading Regulations regime (POATRs) aimed at making it easier for companies to raise funds to be implemented by H1 2025. One key change is increasing the threshold for issuing prospectuses in secondary fundraisings from 20% to 75% of a company’s issued share capital. Before, if a company wanted to issue new shares and raise funds from investors, they had to provide a detailed legal prospectus if they were selling more than 20% of their existing shares. Now, that threshold has been raised to 75% so fewer companies will need to go through the costly and time consuming process. This change will help growing businesses to attract more investment more efficiently, helping them scale. Also see new regime for public offer platforms.
2. Growth of Secondary Markets
Investors are increasingly gaining access to more liquidity and deals on secondary markets. Platforms such as Crowdcube and Republic Europe now facilitate secondary sales, which allows early investors to sell (some of) their equity before a company reaches an IPO or acquisition. This change is aimed at addressing the lack of liquidity, one of the biggest challenges in equity crowdfunding markets.
3. Crowdfunding as a Strategic Scale-up Expansion Tool
Some types of established companies use equity crowdfunding for not just capital but also as a way to engage their customers. For example, Gocycle used equity crowdfunding to introduce its new range of e-bikes to secure investment and strengthen brand loyalty at the same time.
UK Equity Crowdfunding Example Raises in 2024
1. Sunswap raised £17.3 million (Developing zero emission transport refrigeration systems)
2. Plum raised £2.7 million then raised £16 million series B shortly after (Fintech platform helping users automate saving and investments)
See: Revolut’s Crowdfunding Success from Start-up to $45 Billion
3. MishiPay raised £3.3 million (Retail payment solution, scan and pay via mobile devices)
4. WatchHouse raised £7.17 million (High-end coffee chain expanding across London)
What Lies Ahead for UK Crowdfunding?
The UK equity crowdfunding sector is in a period of transition. Even though capital and deal volumes have declined in recent years, new regulatory changes and evolving incentives offer potential for renewed growth. The FCA’s changes to fundraising rules, the rise of secondary markets, and the strategic use of crowdfunding by more established companies could reinvigorate investor interest.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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