Crowdcube is committed to promoting investor protection and transparency by providing our investor community with the necessary tools and information for informed investment decisions, including an understanding of potential risks.
Our Due Diligence Charter outlines the analysis and verification that is conducted on financial promotions that are offered on Crowdcube.
Crowdcube approves financial promotions on behalf of companies to ensure that they are clear, fair and not misleading.
In line with our company values, our guiding principles for this Charter are:
Integrity: to act with integrity and treat our investors and fundraising companies fairly and in accordance with the principles of the duties that we owe to our customers
Diligence: to act with skill, care and diligence
Transparency: to be open and transparent with our customers at all times
The Pitch Page contains the core proposition, information about the business and an important disclosure document, which we call the Legal Review (you may receive the Legal Review via email or via your Crowdcube account in some cases). All investors must read the Pitch Page and the Legal Review, because they contain important due diligence information.
You must also consider your own personal investment requirements and consider making your own further due diligence enquiries, which you can do using the Crowdcube Forum to ask the company questions about the business and/or investment proposition.
What does this charter not cover?
Crowdcube facilitates some offers (pre-emption offers to existing shareholders, exempt offers to High Net Worth or Sophisticated Investors) which are not financial promotions. We will clearly identify where this is the case on the offer.
Some secondary transactions offered on Crowdcube where existing shares in a Company are offered for sale by existing shareholders in an investment round, rather than the Company issuing new shares to raise funds
What we review and what we don’t review
Crowdcube is a platform which approves financial promotions in accordance with the requirements of financial services law and regulation and the guidance of the Financial Conduct Authority. Crowdcube is not an adviser, does not make recommendations about investment propositions on the platform and does not tailor due diligence to individual investors requirements. You can read more about doing your own due diligence here.
Investors should be aware that Crowdcube relies upon information provided by every applicant company and its directors who are required to ensure all information provided is true and accurate. Crowdcube also relies on third-party tools to conduct some due diligence. Crowdcube’s investor terms and conditions, including Crowdcube’s limitation of liability, apply to investments made on the site and can be found here.
Crowdcube’s Due Diligence Charter was last updated in March 2023
What we do
What we don’t do
Crowdcube may provide guidance and comparisons to a Company but the decision on what valuation to offer is at the Company’s discretion.
Generally, this price will have been agreed between the Company and a cornerstone investor ahead of the Crowdcube Pitch. Crowdcube will check that the same valuation is offered to Crowdcube investors.
Crowdcube does not set the valuation or provide an opinion on the valuation
Crowdcube verifies that all statements in Pitch Pages, Company Updates posted on Pitch Pages, marketing communications and Legal Reviews (Pitch Materials) are accurate. This will be done by obtaining, where possible, independent evidence. Certain statements may rely on the company’s own systems - for example, stock or customer management systems, or documents in the company’s control - for example any commercial contracts, leases or partnerships referred to in Pitch Materials. We will also verify any licences or regulatory status referred to within Pitch Materials.
If you request information from the Company that is not contained in the Pitch Materials, we will not approve that information as part of the financial promotion.
The pitch or communications from the Company may contain links to third party websites, which are provided for your information only. We have no control over the contents of those sites or resources, and accept no responsibility for them or for any loss or damage that may arise from your use of them.
Aspirational Statements and Forward looking Statement, including stated use of funds
Crowdcube checks aspirational statements, including future projects, plans and intended use of funds for plausibility and for evidence of steps taken towards achieving stated aims.
Where these statements are included within Pitch Materials, Crowdcube will review the plans to confirm they are plausible in the context of the raise and current market conditions. This may include reviewing business plans, project roadmaps, hiring schedules, financial scoping documents, commercial heads of terms and evidence of partnership or contract negotiations.
The financial promotion does not contain a full forecast and Crowdcube does not approve a company’s forward looking financial plan.
Crowdcube does not approve or endorse the company’s business plan.
Crowdcube does not mandate use of funds, because we recognise that early stage companies sometimes need to pivot and it is the directors’ responsibility to determine whether a change of direction is required.
Any opinion forward looking statement can not be guaranteed as circumstances and business priorities may change.
If a Company believes that the investment round is eligible for a tax relief scheme (such as the EIS scheme), Crowdcube will verify this information from HMRC correspondence or advice from a tax advisor. If a Company has applied for advance assurance but it has not yet been received and is unable to provide independent advice confirming EIS conditions are met, the Pitch will note “EIS Pending” and closing will not occur until the EIS is confirmed.
Please note that this does not guarantee tax relief is available and that any tax relief is dependent on the individual investor’s personal circumstances.
Crowdcube will check that any rewards offered to investors as shareholder benefits post investment are reasonable and deliverable.
Crowdcube is not responsible for delivery of the rewards - this is the responsibility of the Company.
What we do
What we don’t do
Forward looking financials
Crowdcube will verify that a Company has sufficient cash reserves after a raise for six months, by reference to the existing monthly burn rate, current cash position and investment funds to be received.
Crowdcube does not verify financial projections, revenue forecasts or any other forward looking projections that the Company may create and any forecasts that may be provided by the Company to investors on request by an investor do not form part of the Financial Promotion.
Most start-up business will require further funding does not provide an opinion or assurance of the Company’s ability to obtain future funding.
Where key historical financial information is included in Pitch Page or Legal Review Crowdcube will verify against publicly available sources (typically Companies House). Every Pitch Page includes a link to Companies House, where audited accounts can be reviewed.
Crowdcube does not approve or sign off management accounts from the end of the last audited accounts to the current date
What we do
What we don’t do
Disclosure of wider round
Where the Crowdcube raise is part of a wider round, this will be disclosed to investors on the pitch page with full details in the Legal Review in order to disclose clearly to investors the total funds being raised by the Company on the same terms as those being offered to Crowdcube investors.
Crowdcube does not approve the company’s financial projections or budget.
Use the progress bar to show you the total funds being raised on the same terms being offered to you.
The progress bar may include some off platform investments, provided we are satisfied that the terms of those investments are the same as being offered to Crowdcube investors and that the funds have not been spent before the campaign.
Crowdcube does not allow a Company to include on the Progress Bar investments made at the same time as the Crowdcube offer, but which are on different terms - these will be set out in detail in the Legal Review.
Crowdcube will always check that the share price being offered is the valuation divided by all shares, options and convertibles - usually referred to as the fully diluted equity.
Where the Crowdcube raise is part of a wider round, this will be disclosed to investors on the pitch page with full details in the Legal Review in order to disclose clearly to investors the total funds being raised by the Company and the terms of that investment.
As with the valuation, Crowdcube does not offer an opinion on the share price, which is set by the valuation: the share price check is to confirm that the share price has been accurately calculated from the valuation.
What we do
What we don’t do
The Legal Review contains a specific section where a Company must include the key risks to their business moving forward, including sector and industry specific risks. They may also include a statement regarding their efforts to mitigate these key risks.
However, investors should be aware that early stage investments are inherently risky and not all risks can be foreseen or sufficiently mitigated. Please read our full Risk Warning.
What we do
What we don’t do
Crowdcube will review the current structure of the Company and any proposed changes to that structure. This includes the shareholder composition, group structure and any subsidiaries. We will also review constitutional documents such as the articles of association and any shareholders’ agreements, which will include reviewing the shareholder protections being offered to Crowdcube investors.
Where there are different share classes with different rights, we will disclose this with an explanation of how the different rights may impact a shareholder.
Crowdcube will not offer an investment opportunity in anything other than a group top company, except in exceptional circumstances (such as where an special purpose vehicle is being used for the investment and this will be clearly disclosed).
Crowdcube makes enquiries about litigation and disputes that a company may be involved in and conducts a search to check for any court judgements that have been made against the company.
Where potential litigation is disclosed, Crowdcube will make further enquiries, in particular about the potential financial exposure and the risk of the company losing the litigation. Crowdcube will disclose details of such litigation in the Legal Review, however generally, if a company has material litigation ongoing which Crowdcube believes could materially impact the business, Crowdcube will not proceed with the Pitch until that litigation has been resolved, Crowdcube will not proceed with listing a Pitch on behalf of that company until the litigation is resolved.
Offer any opinion about the likelihood of success of any litigation involving the Company.
Intellectual Property and Assets
Where Intellectual Property or assets are material to the business or mentioned in the Pitch Materials, we will ask the company to demonstrate its ownership or right to use that Intellectual Property or asset.
We will highlight to investors where any intellectual property protection is pending - such as following a patent application.
Conduct due diligence on non-material IP or assets.
Where a contract is material to the business or mentioned in the Pitch Materials we will review the contract and confirm its key terms.
Crowdcube will not conduct detailed due diligence on the following, unless we think that they are material to the financial promotion - for example, if they are referred to in Pitch text:
Crowdcube will make enquiries regarding the debts of the Company, including through a third party credit check on the Company. Where loans exist, this will be disclosed on the pitch for investors at a high level; material loan agreements will be reviewed as part of the Legal Review and summary terms disclosed within this document. If undocumented directors’ loans exist, Crowdcube will ensure these are documented and disclosed in the above manner.
Crowdcube's standard position requires that Companies undertake to investors not to use crowdfunding funds to repay debt. Any exception to this, will be disclosed in the Legal Review.
Crowdcube will not review the terms of non-material loans or trade debts incurred in the ordinary course of business.
What we do
What we don’t do
Crowdcube will conduct background checks on the company and its directors including personal credit and bankruptcy checks, director’s disqualification checks, previous company checks and accreditation checks.
Where relevant information is discovered, disclosures may be provided to potential investors either on the pitch page or as part of the Legal Review.
Crowdcube will check that there is an appropriate level of full time commitment to the business from Key Personnel.
Crowdcube will verify any statements made about the experience or qualifications.
Interview key personnel about their experience or offer any opinion about the key personnel’s ability.
What we do
What we don’t do
The forum is provided by Crowdcube to facilitate communication between potential investors and the Company. The forum and user posts are subject to our discussion rules (available here), which we encourage all users to read. The forum does not form part of the financial promotion.
However, the Forum will be reviewed and monitored by Crowdcube for key information that Crowdcube reasonably believes investors should be aware of before investing. This key information may then be incorporated into the pitch text, legal review or pitch updates which are sent to investors and approved as part of the financial promotion.
Crowdcube will not approve responses to investor questions posted by the Company in the Forum.
Private communications, including Restricted Documents
As well as the Forum, investors may request information privately from the Company. This may include “Restricted Documents” which can be requested from the Company. These documents do not form part of the marketing campaign and are provided at the Company’s discretion to investors.
Access to these documents may be requested by investors and granted by the Company, and they do not form part of the financial promotion. However, Crowdcube will review these documents to ensure that they are factually accurate, consistent with the Financial Promotion and to ensure that all material information is disclosed to investors in the Financial Promotion.
Crowdcube will not approve private responses to investor questions from the Company.
Crowdcube does not approve Restricted Documents or any other documents or information provided by a Company to an investor on request which do not form part of the marketing campaign.
Investing in start-ups and early-stage businesses involves risks, including illiquidity, lack of dividends, loss of investment and dilution, and it should be done only as part of a diversified portfolio. Crowdcube is targeted exclusively at investors who are sufficiently sophisticated to understand these risks and make their own investment decisions. You will only be able to invest via Crowdcube once you are registered as sufficiently sophisticated. Please click here to read the full Risk Warning.
Crowdcube Capital is authorised and regulated by the Financial Conduct Authority (FCA) . This page has been approved by Crowdcube. Pitches for investment are not offers to the public and investments can only be made by members of crowdcube.com on the basis of information provided in the pitches by the companies concerned. If this page contains details of historical performance, investors should be aware that past performance is not a reliable indicator of future results. Further restrictions and Crowdcube's limitation of liability are set out in the Investor Terms and Conditions.
Investment opportunities are not offers to the public and investors must be eligible Crowdcube members. Please seek independent advice as required as Crowdcube does not give investment or tax advice.