An equity crowdfunding platform is an FCA-authorised website where a company lists a fundraising round and many investors - sometimes hundreds - buy shares in it online, often from as little as a few hundred pounds. In the UK the two names you'll meet first are Crowdcube and Seedrs, which merged in 2021 but still operate as recognisable brands. The platform runs the campaign, holds your money in escrow until a minimum target is hit, handles the paperwork, and after the round closes usually holds the shares on your behalf. That last part is where it stops resembling a normal angel deal.
For an angel used to a term sheet and a seat at the table, the platform model is a different animal. You're not negotiating; you're accepting terms a lead has already set. You're not on the register; a nominee is. And the company on screen has been packaged for a crowd, which is not the same as packaged for someone writing diligence questions. None of that makes it worse. It makes it different, and the differences are worth understanding before money moves.
One line before we go further, and we'll come back to it: this is editorial information, not financial or investment advice. We'll explain how the mechanics work and what to read. What you do with any of it is between you and a regulated adviser.
How does an equity crowdfunding round actually work?
The shape is consistent across platforms. A company agrees a valuation and a target raise, the platform vets it to its own standard, and a campaign page goes live with a pitch, financials, a forecast and - the part that drives behaviour - a live progress bar. Investors commit during the campaign window. If the round hits its minimum target, it completes and shares are issued; if it doesn't, money is returned and nothing happens.
Two features distinguish this from a private angel round. The first is the low entry point: minimums in the hundreds rather than the thousands, which is what lets a round gather a long tail of small cheques alongside a few larger ones. The second is that terms are fixed. A lead investor - sometimes the platform's own syndicate, sometimes a named VC - has usually already negotiated the deal, and the crowd takes it as offered. There's no clause you get to redline.
Nominee or direct: whose name is on the shares?
This is the single most important mechanic to grasp, and the one most new crowd investors skip. Most UK platforms now hold crowd shares through a nominee structure. The platform's nominee company holds the legal title to the shares and acts for all the crowd investors as a single block; you are the beneficial owner - the shares are yours economically - but your name isn't on the company's share register. Seedrs built its reputation on this model; Crowdcube historically offered a more direct route and has moved toward nominee for many rounds.
Why it matters cuts both ways. For the founder, a nominee keeps the cap table to one line instead of three hundred, which makes future rounds and an eventual sale far less painful to administer. For you, it pools voting and information rights so the crowd speaks with one voice - tidy, but it means you personally don't vote your shares or deal with the company directly. Direct shareholding does the opposite: your name on the register, your own standing, and a cap table the founder may quietly resent. Neither is "better". They're trade-offs, and the platform usually chooses for you.
Do crowdfunding deals qualify for SEIS and EIS relief?
Frequently, yes - tax relief is a large part of why these rounds fill. Many companies on Crowdcube and Seedrs are deliberately structured to qualify for the Seed Enterprise Investment Scheme (SEIS) or the Enterprise Investment Scheme (EIS), and campaign pages flag which applies. The headline reliefs, for an eligible UK taxpayer:
- SEIS: 50% income tax relief on up to £200,000 invested per tax year, with a minimum three-year hold; gains on the shares are exempt from capital gains tax if held three years and you received the income tax relief.
- EIS: 30% income tax relief on up to £1,000,000 per tax year - or £2,000,000 if at least £1,000,000 goes to knowledge-intensive companies - again with a three-year minimum hold and a CGT exemption on qualifying gains.
Both schemes need the company to hold HMRC advance assurance before the raise - a pre-investment signal that HMRC expects the shares to qualify - and the company must later issue you an SEIS3 or EIS3 certificate, the document you actually use to claim. The nominee layer is the catch: because the platform's nominee holds title, you want to be sure the platform passes the certificates through to you correctly and on time. The schemes also bite on the company's side - SEIS is limited to firms trading under three years, with fewer than 25 full-time staff and gross assets under £350,000, raising up to £250,000 in total. EIS reaches larger companies: per current gov.uk guidance, broadly those under seven years from first commercial sale, with fewer than 250 full-time-equivalent employees and gross assets up to £30 million before the share issue, able to raise up to £10 million a year and £24 million over their lifetime, with higher ceilings for knowledge-intensive companies. Those company-side figures change, so treat the gov.uk page as the live source.
What do the platforms charge?
Investing in a campaign is generally free at the point of clicking. The platforms make their money two ways. Companies pay the larger share: a commission on the funds successfully raised, plus completion and payment-processing fees. Investors usually pay nothing up front but a cut of any profit on exit - a carry-style fee, often several per cent of the gain when shares are eventually sold, and sometimes a dealing fee on secondary trades. It's a model that only charges you when you make money, which sounds friendly until you remember how rare exits are. Fee terms move, so read the platform's own schedule rather than this paragraph.
Diligence, liquidity and the honest trade-off
Here's where editorial judgement earns its place. The polished campaign page is a marketing document, not a diligence pack. A lead investor may have done real work, or the "lead" may be light. The forecasts are the founder's. And once you're in, you're in: these are illiquid private shares, exits routinely take the better part of a decade, and the occasional secondary-market window a platform runs is thin and priced at a discount. The relief and the low minimum lower the cost of entry; they do nothing to change the underlying odds, which is that most early-stage companies fail and returns hide in a handful of winners.
So the platforms are best read as one channel among several - genuinely useful for seeing SEIS/EIS-ready deals at small ticket sizes, weaker on the control and bespoke terms a direct angel round gives you. Whether you use them, and how much you commit, is a question for you and an FCA-regulated adviser. Our job is to explain what the machinery does, not to point you at a button.
Frequently asked questions
How do equity crowdfunding platforms like Crowdcube and Seedrs work?
They are FCA-authorised online platforms where a company lists a round and many investors put money in, often from a few hundred pounds upwards. The platform runs the campaign, handles the legal documents and payments, and after a round closes typically holds the shares for investors through a nominee structure. Companies usually have to hit a minimum target before any money is taken. This is general information, not investment advice.
What is the difference between nominee and direct shareholding on a crowdfunding platform?
Under a nominee structure the platform holds the legal title to your shares and acts on behalf of all the crowd investors, so you are the beneficial owner but not on the company's share register yourself. Direct shareholding puts your name on the register. Nominee keeps the cap table tidy and pools voting, but you give up direct control; direct gives you more standing but a messier cap table for the founder. Most UK platforms now default to nominee for crowd investors.
Can you claim SEIS or EIS relief on equity crowdfunding investments?
Often, yes, if the company and the shares qualify. SEIS gives 50% income tax relief on up to £200,000 per tax year; EIS gives 30% on up to £1,000,000 (or £2,000,000 where at least £1,000,000 goes to knowledge-intensive companies). The company needs HMRC advance assurance and must issue you an SEIS3 or EIS3 certificate so you can claim. A nominee structure can affect how and when certificates reach you, so check the platform handles this. This is general information, not advice.
What fees do investors pay on equity crowdfunding platforms?
Headline campaigns are usually free to invest in, but platforms commonly charge investors a fee on any profit when shares are sold - a carry-style cut, often in the region of several per cent of the gain. Some also charge dealing or administration fees on secondary sales. Companies pay the bigger costs: a commission on funds raised plus completion and payment-processing fees. Read the specific platform's fee page before you commit, as terms change.
Is equity crowdfunding riskier than traditional angel investing?
It carries the same underlying risk as any early-stage equity - most startups fail, shares are illiquid, and you can lose your whole stake. The added wrinkle is that crowd diligence is lighter than a lead angel's, deal terms are presented on a take-it-or-leave-it basis, and exits can take many years. Whether any of it suits you is a question for you and an FCA-regulated adviser, not a newsletter.