The financial services regulator says many investors through crowdfunding sites that raise money for small businesses have been misled about risks. It previously made the explicit statement to investors in such schemes that ‘it is highly likely you will lose all your money’. So far, some £67 million has been raised by 35 crowdfunding sites, which feature many offers from start-up businesses with no track record.
Some crowdfunded businesses have been very successful, such as Brewdog, but at the moment it seems fair to say that crowdfunding is a better proposition for the business owner than for investors.