‘The Crowd’ steps into AIM’s shoes as the chosen route for EIS, but is there trouble brewing?
A quick browse through several of the leading equity crowd funding web sites reveals a host of exciting investment opportunities, nearly all of which come with the added attraction of Enterprise Investment Scheme (‘EIS’) tax relief. We appreciate that many of the proposed investments are in very early stage businesses and therefore extremely risky, but there is no doubt there are many that merit support and could also go onto great things. There are also some larger opportunities on offer on the crowd funding sites, several of which may have previously found their way onto AIM but now have another, seemingly simpler and lower cost funding route to follow via ‘The Crowd’. It’s all very exciting for small businesses looking to raise money but we question how well the crowd is going to do out of many of these offers.
The web site of the UK Crowdfunding Association lists 41 members. This also excludes the likes of Funding Circle and SyndicateRoom, both of which are well established and well-funded, who don’t appear to be members. - Threat to AIM? The crowd funders are evidently becoming a threat to AIM’s position as a viable route for earlier stage funding, although perhaps AIM has passed that stage in its life and is now happier to entertain larger businesses, which certainly appears to be the case if recent IPO activity on AIM is any guide. We also view this as a positive development…