Equity crowdfunding is the process whereby people (the ‘crowd’) invest in an early-stage unlisted company (a company that is not listed on a stock market) in exchange for shares in that company. A shareholder has partial ownership of a company and stands to profit should the company do well. The opposite is also true, so if the company fails investors can lose some, or all, of their investment.
Previously only wealthy individuals, venture capitalists and business angels could invest in startups. Equity crowdfunding platforms have helped democratise the investment process by opening the door to a much larger pool of potential investors, often dubbed ‘the crowd’. Watch an introduction to equity crowdfunding in the video below.
To offset some of the risk involved with investing in early-stage companies, the UK government offers tax reliefs on eligible opportunities in the form of the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS). These are among the most generous tax incentives in the world.
EIS offers up to 30% income tax relief on investments of up to £1m per tax year (£2m where anything above £1m is invested in knowledge-intensive companies). EIS relief was left unchanged at Budget 2025, and from 6 April 2026 it offers a higher rate of upfront income tax relief than a VCT (now 20%).
SEIS offers up to 50% income tax relief on investments of up to £200,000 per tax year in the youngest, earliest-stage companies.
Hold qualifying shares for at least three years and any growth is free of capital gains tax. If a company fails, loss relief can reduce your effective loss.
Tax relief depends on your individual circumstances and may change in the future, and its availability depends on the company invested in maintaining its qualifying status. Learn more about EIS tax relief and SEIS tax relief.
That depends on the investment platform. Equity crowdfunding tends to take place online via FCA-regulated investment platforms, which can offer individual investment opportunities as well as EIS investment funds. The criteria for investment vary from platform to platform, so make sure to do your research before you invest.
Since 2023, the FCA’s rules on the promotion of high-risk investments have set a higher bar for who can invest and how. Before investing through a UK platform you will typically need to categorise yourself as a high net worth investor, a self-certified sophisticated investor or a restricted investor (someone investing less than 10% of their net assets in high-risk investments), and complete an appropriateness assessment showing you understand the risks. First-time investors with a platform also get a 24-hour cooling-off period before their investment can proceed.
Equity crowdfunding for startups is high-risk by nature, so there are a number of things you need to be aware of if you’re considering investing.
It may take a long time for your shares to increase in value, which in turn impacts your ability to make a return by selling them on. Startups that succeed typically do so over a horizon of five to ten years.
Startups normally reinvest any profit into growth rather than paying dividends to their investors, meaning you’re unlikely to see any return until you are able to sell your shares — which can take years, if it happens at all.
Any equity crowdfunding investment you make will be highly illiquid, as there’s no established secondary market where you can easily sell on your shares. You will most likely have to hold your shares until the company you invested in is acquired or floats on an exchange.
If the company you invested in raises more capital at a later date (and it’s almost certain that it will), new shares will be issued to the new investors and your percentage shareholding in the company will be reduced (or ‘diluted’). New shares might also come with preferential rights that could work to your disadvantage if exercised. You can guard against some of the effects of dilution by making sure certain investor protections, such as pre-emption rights, are in place before you invest.
Our Access EIS Fund uses a data-driven model to co-invest with some of the UK’s best-performing angel investors, spreading your investment across a diversified portfolio of high-growth startups. Find out more.
Investing in early-stage businesses involves risks, including illiquidity, lack of dividends, loss of investment and dilution, and it should be done only as part of a diversified portfolio. Tax relief depends on an individual’s circumstances and may change in the future. In addition, the availability of tax relief depends on the company invested in maintaining its qualifying status. Past performance is not a reliable indicator of future performance. You should not rely on any past performance as a guarantee of future investment performance.
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