Equity crowdfunding in the UK has not measured up to the same levels it has attained in the US. Nevertheless, this alternative source of funding has attracted the interest of many investors in the European market. Some of the reasons facilitating this increase in interest for equity crowdfunding are:
1. Investors’ interest in independent deals:
Investors are gradually changing their preferences from platform-based investments to independent deals, provided they forecast success in the deals.
2. Restructuring of existing investment models:
Many stakeholders in the UK investment industry, including angel investors, are showing interest in crowdfunding. Developers are also turning to crowdfunding instead of traditional financing methods.
3. Comprehensive due diligence:
Traditional methods of financing are inclined to law and litigation adherence, which are costly and time-consuming. On the other hand, crowdfunding’s flexibility allows modifications to suit the interest of both investors and developers.
4. Increased in number of high net worth individuals:
The number of high net worth individuals in the UK has risen over the years. These individuals are ready to become retail investors, and for them equity crowdfunding is the most suitable method of investing. This is because equity crowdfunding allows them to invest in their preferred deals, gives them a stake in the deal thus they have control over the execution process, enhances transparency and has less legal formalities.
5. Customized products and services:
Equity crowdfunding enhances direct connection between investors and developers. There are several high-tech tools that have been developed to facilitate communication between investors and developers. This makes it easier for investors to give their opinions and contributions about the project they are interested in and also help developers get feedback that will allow them to integrate it in the project.
The above-mentioned reasons facilitate the rapid growth of equity crowdfunding being experienced in the UK. With this trend, equity crowdfunding is going to be the next preferred choice for both investors and developers in the UK.