Due diligence and equity crowdfunding

Posted by Chris Thomas on Jan 14, 2019 9:14:19 AM

Any business that comes on to Eureeca has already passed our due diligence checks but, more importantly, the very nature of crowdinvesting (crowdfunding for equity) is that businesses are exposed to the crowd who will themselves ask questions, conduct due diligence and filter businesses over the 90 days they have to raise the funds. 

We have created a stable platform to provide the first opportunity for investors to connect with SMEs and entrepreneurs and invest money in exchange for equity. All funds are held in a segregated escrow client account away from Eureeca’s own money. Monies are transferred to the SME once the shares have been issued in the name of those investors.

As with any other business in the world, when you are looking for investment to grow or scale your business, you have to provide potential investors with important and sufficient information to be able to make an informed decision. Eureeca has a number of mechanisms including non-disclosure and non-competition agreements that are designed to protect entrepreneurs and business owners.

Meanwhile, all investors planning to invest via Eureeca are required to take an investor suitability test. This ensures that any investment they make on the platform will be made by investors who are sufficiently knowledgeable to make such investments. This is one of the requirements of  the UK Financial Conduct Authority (FCA), which is one of the regulators the Eureeca group is licensed by.

FCA-regulated equity crowdfunding platforms like us require that all would-be investors must pass the test before they can start investing. By ensuring that all of our potential investors are educated on the investment process and the risks involved with financing early-stage businesses and SMEs, the platform becomes a secure investment environment for everyone involved in the equity crowdfunding ecosystem

With the web bringing people and communities closer, people and companies are now more transparent about their businesses. Rather than treating this as a threat, we see many companies using this as an opportunity to improve their businesses and strategies by putting it out to the crowd. Effectively the crowd helps to serve as a powerful tool to test, challenge and improve your business. The interaction with and experience of having the business validated by the crowd is invaluable for entrepreneurs regardless of them reaching their funding target.

Topics: equity crowdfunding, Investing, due diligence