Knowledge Base: Crowdfunding guide

What is crowdfunding?

Crowdfunding is a way to bring retail investors into your funding round, often to top up the round after larger investors have committed.

• Investors can participate with small amounts, sometimes as little as £100.

• Retail investors typically invest via an SPV (Special Purpose Vehicle). An SPV is a legal entity that aggregates multiple investors into a single shareholder in your company. This simplifies the shareholding structure and reduces paperwork.

See our guide on SPVs

What do you need to prepare to start?

Before approaching a crowdfunder, you’ll need:

• About half of your funding round lined up: Crowdfunders usually prefer that some capital is already committed before they come in - typically this would be 50% or more, but worth checking with your potential provider.

• Advance Assurance for SEIS and EIS (UK tax relief schemes): Retail investors can benefit from these schemes, so having SEIS/EIS Advance Assurance in place is critical.

How does it differ from other investor types?

Unlike angels or venture investors:

• Crowd investors do not sit directly on your cap table;

• Instead, they sit under an SPV, which is a single legal shareholder on the captable. The investor remains a beneficial owner of the shares and can still benefit from SEIS/EIS, potentially.

• This keeps your cap table cleaner and simplifies shareholder communications.

Standard scenario:

• Your funding round will typically include a single crowdfunder, structured through one SPV.

• The usual process:

  1. The crowdfunder runs its campaign and gathers commitments.

  2. After the cooling-off period ends, the crowdfunder confirms the final investment amount.

  3. You then add this single SPV investment into your round.

• Because all individual backers are aggregated into one SPV, you do not need to track investors individually or enter multiple SPVs.

How can you make your FounderCatalyst paperwork crowdfunder compatible?

FounderCatalyst works with Republic (previously known as Seedrs) and other groups to generate compliant legal documents to their specific requirements:

• Select Republic from the dropdown in your funding setup.

• The system auto-populates a Republic-compliant SSA (Subscription and Shareholders Agreement), outlining the terms of the investment.

• This ensures your documents meet both UK company law and the crowdfunder’s requirements.

How do you add the crowdfunder to the platform?

• In Step 2 of your round setup, add the crowdfunder (e.g., Republic).

• You can also add other investors before closing the round - angels, angel networks, and crowdfunders can all appear together.

• The system supports varying share prices (via discounts), but crowdfunders usually expect all investors to pay the same share price.

• Investors’ contributions and allocations appear in the Subscription and Shareholders Agreement, so everyone sees who owns what.

Overseas crowdfunder

You can use a non-UK crowdfunder, but:

• The legal documents generated by FounderCatalyst remain under UK company law.

• The process:

  1. Calculate how much the crowdfunder is investing.

  2. Invite the nominee (the SPV manager) to your platform.

  3. The nominee becomes the legal owner of the shares, representing the overseas investors.