Strategic crowdfunding advice from solicitors who specialise in helping businesses thrive. Our Corporate team can help you conduct a wide range of transactional arrangements, including handling the legal aspects of equity crowdfunding, rewards-based crowdfunding and peer-to-peer lending.
We advise all kinds of businesses, from entrepreneurs and start-ups to small and medium enterprises to large national companies across London and the South East.
Based in Orpington, we provide City-level advice with a friendly, personable touch. So, we are perfect if you are looking for lawyers who will take the time to truly get to know your business and provide a bespoke level of expert advice.
Crowdfunding is a beneficial way to raise finance without relying on more traditional funders, such as banks, private equity funds and angel investors.
Crowdfunding has grown significantly over the past few years, and our corporate lawyers have been at the forefront since the start. We help entrepreneurs and businesses with a wide range of associated legal matters, including:
- General advice about the legal implications of raising finance via crowdfunding, tailored to suit your individual circumstances and commercial goals.
- Preparing for crowdfunding campaigns and putting in place the legal foundations your business needs to crowdfund, including commercial contracts, intellectual property matters and employment law issues.
- Preparing investment documentation, such as funding arrangements, bespoke shareholders agreements and Articles of Association.
- Advising on contractual matters between businesses, investors and crowdfunding platforms.
- Advising on ongoing relationships with investors and shareholders.
- Resolving disputes between businesses, investors and crowdfunding platforms.
Speak to our crowdfunding solicitors in Orpington today
If you require further advice, please fill in our Online Enquiry Form and one of our corporate solicitors will contact you as soon as possible.
Why choose our crowdfunding solicitors?
We are members of the Kent Corporate Finance Alliance, an organisation of professional services firms dedicated to delivering specialist advice on matters of corporate finance.
Our Corporate & Commercial team are leaders in our field, having been independently recognised by prestigious client guide, Chambers & Partners. We are ranked Band 1 (the highest band) for our Corporate expertise in the South of England and are particularly distinguished for our work with small to medium enterprises, start-ups and owner-managed businesses.
Our team includes two Chambers recommended lawyers:
- Ben Madden – our Head of Corporate & Commercial and ‘a leading lawyer in the market’.
- Andrew Wright – a Senior Partner and highly experienced solicitor who, ‘understands the client and has the ability to pick up on the nuances’.
What is crowdfunding?
Crowdfunding is a way of raising finance from the public online. It involves pitching your business, product, project or idea to attract interest from a pool of investors.
Crowdfunding is an alternative to raising finance through traditional means, such as approaching your bank for a business loan.
Commonly, businesses are able to attract a larger number of small investors, rather than relying on fewer large investors. The pitching process also tends to be less formal and much more accessible than preparing pitches for other types of lenders such as investment firms or commercial lenders.
What different types of crowdfunding are there?
There are three main types of crowdfunding which may suit you depending on your individual circumstances. We can provide further advice about your options and which method of crowdfunding is right for you so you can make an informed decision about how to proceed.
The three main types of crowdfunding are:
Investors will require equity in return for their investment, including dividends and a share of any proceeds. Investors are also commonly interested in businesses which can offer tax-efficient Enterprise Investment Schemes (EIE) or Seed Enterprise Investment Schemes (SEIS).
The investments provided via equity crowdfunding tend to be larger than with other types of crowdfunding. This type of crowdfunding might be right for you if you are an early-stage business or start-up looking for fast growth.
Loan-based crowdfunding (peer-to-peer lending)
Loan-based crowdfunding, which encompasses peer-to-peer lending (P2P), is where investors provide capital to a business in the form of a loan. Interest rates are agreed in advance and the loan must be repaid within an agreed term.
P2P has become popular in recent years as interest rates tend to be lower than other types of loan and investors can usually expect a better return than they would with a savings account.
However, defaulting on a loan can result in recovery action, just as it would if you defaulted on a bank loan.
Rewards-based crowdfunding is where you offer investors rewards, such as early access to a product or service, discounts, exclusive content and experiences. This type of crowdfunding is commonly used to facilitate the creation and sales of a tangible product.
The amounts advanced tend to be smaller than other types of crowdfunding, however, with intelligent marketing, creating a buzz around your product can bring in significant investment.
From a legal and tax perspective, rewards-based crowdfunding is considered online sales, so this must be carefully considered and budgeted for.
Is crowdfunding regulated?
The crowdfunding industry is regulated by the Financial Conduct Authority (FCA) and many crowdfunding platforms are voluntary members of the UK Crowdfunding Association (UKCFA).
The rules and protections available to you depend on the type of crowdfunding you use. We can provide further advice about your own duties and rights, ensuring your interests are protected at all times.
Is crowdfunding right for your business?
Crowdfunding can have many benefits for your business, such as:
- It is a relatively easy and accessible way to get funding, allowing you to focus on running your business.
- Crowdfunding platforms allow you to reach huge numbers of investors at once, many of whom are established and trusted funders.
- Investors are members of the public, so crowdfunding is a great way to get your business in front of potential customers as well as investors (sometimes customer and investor is even one and the same). So, as well as looking for finance, you can also get valuable feedback about your product or service.
- Once your business starts to attract some interest, more investors are likely to follow – a phenomenon known as ‘social proof’.
- People who invest in your business will often have a personal interest and may even independently promote your work.
However, there can be some drawbacks to crowdfunding which you should take into account, such as:
- Crafting the perfect pitch is essential, so may require some investment in PR and marketing to get it right.
- Some crowdfunding platforms require you to set a fundraising target which you must meet to get a penny of the money. If you do not reach the target, this could affect your reputation with other prospective investors.
- Pitching on online platforms always comes with the risk that someone will take your business ideas. Getting specialist advice about intellectual property is essential before taking the plunge.
- Crowdfunding can take a lot of focus, particularly methods such as rewards-based fundraising which will require sustained marketing and engagement with investors. This could take precious time away from your business.
- You will need to take the costs of crowdfunding into account, such as the fees for using your chosen crowdfunding platform.
As part of our service, we can talk you through your options and provide tailored advice so you can make confident decisions about how to move forwards.
Speak to our crowdfunding lawyers in Orpington today
If you require further advice, please fill in our Online Enquiry Form and one of our corporate law solicitors will contact you as soon as possible.