FCA concern over social media links to crowdfunding

The Crowdfunding Centre is expected to contact the Treasury about the matter
The Crowdfunding Centre is expected to contact the Treasury about the matter
PAUL ROGERS/THE TIMES

The Financial Conduct Authority has written to equity crowdfunding websites expressing concerns that messages posted on social media sites do not properly explain the risks to potential investors.

Equity crowdfunding allows small, private companies to raise money from online investors by selling stakes for as little as £10.

One website accused the regulator of “threatening financial innovation” by “banning signposting [to fundraising] and free flow of discussion and opinion on social media and web channels”.

The fast-growing industry is particularly concerned it is being asked to put risk warnings into every Twitter message, or “tweet”. It says this will stifle the ability of platforms, entrepreneurs and investors to discuss funding rounds.

A start-up seeking funding using this method and The Crowdfunding Centre, an industry comparison