It was a great pleasure to spend time last week at the EU Startups Summit in Malta. One particularly worthwhile session was a panel discussion on Equity Crowdfunding Dos and Don’ts. A panel of international experts began with a runthrough of the added benefits equity crowdfunding delivers beyond raising funds for early stage businesses to accelerate their growth. Their positivity clashed with a report on the current equity crowdfunding slump I came across on my return home.
Panellists, left to right: Mindaugas Valiulis – Policy Officer, European Commission; Grégoire Touazi – Legal Counsel, Crowdcube Europe; Nora Szeles – CEO, Tőkeportál; Christopher Burge – Co-Founder & CEO, Spark Crowdfunding; Oliver Gajda – Executive Director, Eurocrowd.
Their combined summery of added benefits included:
- Successful crowdfunding shows that a business (not necessarily only startups) has the support of a crowd of believers.
- A successful round provides social proof of a business worth backing
- A crowdfunding investment round can act as a catalyst to unite a community behind a business opportunity, and give them a sense of identity and stronger belief.
- Successful crowdfunding is good marketing – it gets a business noticed and talked about.
- The best retail investors will support their investments with positive word-of-mouth as they progress up the brand loyalty ladder, becoming advocates and brand ambassadors, and may also become important customers as well.
- Crowdfunding enables backers to meet business founders, which can lead to an exchange of introductions, and offers of insight, expertise and assistance.
- Each subsequent round can build on the previous one(s), as investors scale up their investments over time.
- Future raises have potential as private rounds, carried out exclusively among existing shareholders.
However, my return to the UK coincided with Bloomberg UK publishing an article on the current downturn in equity crowdfunding. The author wrote: “Weaker investor appetite, tough economic headwinds and a patchy success rate are making the [equity crowdfunding] model a tougher sell for both businesses and buyers.”
Data compiled by Beauhurst shows the degree of the downturn.
It got me thinking that when equity began in the UK in around 2012, there was a very low interest rate and there was very low inflation. Net Present Value calculations were hardly required when considering potential returns on investments.
Then in swift succession there was Brexit, Covid (with ‘quantitative easing’ = printing money), the follow-on global reassessment of startup values, a return of inflation, and now Trump’s deliberate destabilisation of global trading.
Aside from these global macro factors, there has been unsettling news within equity crowdfunding itself. This includes cases of businesses that had been funded through crowdfunding going in to administration, and then being bought back by the original founder who was then debt-free. Though the investments of the crowdfunding backers were wiped out and worthless. It’s difficult for investors and interested onlookers to see how this is fair. Thank you East London Liquor Company, among others. Or as they explain it, the blame should fall on HMRC for forcing the business into administration.
The UK Crowdfunding Association – formed to advance the crowdfunding and alternative finance industry – has been publicly silent, while some newspaper reader comments I came across showed the mood of disgruntled investors who responded to such reports with negativity and accusations of behaviour bordering criminality.
While platforms continue to consolidate, Eurocrowd recently commented that the ECSP Regulations intended to harmonise equity crowdfunding across the EU have failed to bring about an anticipated increase in the popularity and use made of equity crowdfunding.
Update
After originally publishing this article in April 2025, I later raised the matter on X/Twitter. My comment was picked up by Crowdfund Insider, who then published their own article on the topic in November 2025. Their answer, in summary, was: “It is a combination of factors, including questions about deal quality, risk aversion, and economic hurdles for smaller investors—such as rising taxes.”
There is also the growing level of rival opportunities for retail investors. The value of gold has risen by over 50% in the 12 months to 4 December 2025, and Bitcoin has provided investors with its usual rollercoaster of ups and downs. Casks of aged whisky and investments in works of art by up-and-coming artists are among the alternative options increasingly available today.
Is it any wonder there’s been a downturn and an equity crowdfunding slump? And where is there a voice that is championing crowdfunding as an effective means of delivering numerous other benefits on top of raising investment funds for privately-owned businesses?