Crowdfunding is booming. But for investors, choosing where to place your money can feel like a minefield.

An agency launching today to help investors make smarter decisions hopes to change that, by giving all crowdfunding campaigns an FCA regulated rating of “gold”, “silver” or “bronze”.

Crowdfunding campaigns grew by a staggering 420 per cent last year, so there’s no question of microfunding’s allure. But how do investors know what to back?

Most of the time, there’s no more to base your decision on than comments from bloggers, or simply the information entrepreneurs provide themselves on the crowdfunding platform, which could be no more than a couple of pictures or a short promo video.

“It’s an issue, investors don’t have enough information to help them make sensible investing decisions,” co-founder Alex Heath told City A.M.

The former chief executive of Interactive Investor teamed up with founder of AngelNews Modwenna Rees-Mogg last summer, when he realised he kept getting outbid in deals – by a crowdfunding campaign.

Together, the two have put together Crowdrating, which promises to investors give objective information on campaigns, as all ratings will be regulated by the FCA.

“Whilst our rating should only be one part of the investing decision, it should be something people can rely on, so it needed to be properly regulated,” explains Modwenna Rees-Mogg.

“We’re giving advice and guidance, and sending people in a certain direction.”

Read more on Crowdfunding:

The agency is rating all live campaigns on crowdfunding platforms Crowdcube, Seedrs and Syndicate Room, providing a rating based on three dimensions: management, product and investment.

The founders say the response from both investors and entrepreneurs has been “encouraging” so far:

“Investors are saying ‘thank goodness you’ve arrived’, and entrepreneurs, interestingly, are open and interested in what we’re saying – even when we point out  a weakness,” said Rees-Mogg.


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