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London Stock Exchange Group PLC is turning to a crowdfunding platform to give small-time investors in the U.K. access to initial public offerings, a market which is largely the preserve of institutional investors and rich individuals.

The LSE made Syndicate Room Ltd. a member of the exchange on Monday, allowing the startup’s customers to invest in IPOs and private share placements.

The move, the first of its kind in the U.K, aims to democratize the process of investing in companies coming to market in a response to criticism from smaller investors that they are often frozen out of these deals in which shares are often sold at a discount.

Depending on the IPO, Syndicate Room could allow investors to put sums of a few hundred dollars into listings via its website.

Other exchanges are already in on the act. In Australia On-Market Bookbuilds flags upcoming IPOs to members who can participate. Last year J.P. Morgan Chase & Co. and Motif Investing Inc., an online brokerage, joined a program to allow individuals to invest as little as $250 in IPOs.

The battle to open up the U.K. IPO market could prove long. Currently only a few initial public offerings include a tranche reserved for retail investors. Previous efforts to draw in a wider community of investors during the dot-com boom floundered as smaller investors lost money on sinking stock prices.

The U.K.’s Conservative government is trying to rekindle former Prime Minister Margaret Thatcher’s vision of a shareholder democracy. Thousands of retail investors bought shares when the government privatized various U.K. public companies in the 1980s.

That enthusiasm for IPOs hasn’t lasted. Some 12 million people in the U.K. population are estimated to own shares, but more than three quarters of those didn’t take part in initial offerings of stock last year, according to Syndicate Room. The U.K. government hoped to sell shares this year in Lloyds Banking Group PLC, one of the U.K. lenders bailed out in the financial crisis, but it has postponed the plan given volatile markets.

Some British executives and academics have called for better use of new technology to widen access to IPOs.

The traditional IPO process is “preindustrial,” Paul Myners, the former financial services secretary to the U.K. Treasury said last April.

There hadn’t been much technological innovation in IPOs because “entrenched interests” were resisting change to a business model that suited them, Mr. Myners said. “Too many people’s rice bowls are at risk,” he said.

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