The Scottish platform ShareIn – now fully regulated by the FCA – is looking to re-open equity crowdfunding to the masses.
It’s an unusual take on the FCA’s regulatory regime – which has so often been criticized for in fact taking the crowd out of crowdfunding. Such criticism usually centres upon the rule that prevents ordinary investors from committing more than 10% of their “net investible assets” to equity crowdfunding. But as ShareIn rightly acknowledges, holding the FCA license is now the only method of incorporating private investors into a platform. ShareIn stated that many of its competitors operate “Unregulated Collective Investment Schemes” – allowing them to deal only with professional clients, high net worth individuals and sophisticated investors.
Jude Cook, CEO of ShareIn, explained:
“For sites that do not have full FCA authorisation, the only option for ordinary people to invest is to agree to classify themselves as a professional client, which means they must waive their rights to complain to the Financial Ombudsman Service or to claim compensation under the Financial Services Compensation Scheme.”
“We are very excited to be one of the few UK equity crowdfunding sites to offer true crowd investment, ensuring that we help keep the crowd in crowdfunding!”
“Anyone who agrees not to invest more than 10% of their “net investible assets” can invest on ShareIn. It’s not just for the rich or people already involved in early stage finance.”
ShareIn, which focuses exclusively on funding technology and health focused companies, is the first Scottish platform to achieve authorization under the new crowdfunding regulations – which came into effect April 1st this year. The platform is designed to service companies looking to raise equity finance between £40,000 and £1 million.
ShareIn’s positive stance on the regulatory regime is refreshing. After all, the FCA has not cut ordinary investors out of equity crowdfunding (via regulated platforms); it has merely limited their capacity to get involved. This is eminently sensible for investments that lack guaranteed returns – and which are best held as a small, high-risk/high-reward segment of a diversified portfolio.