Twelve “crowdfunding” firms have joined forces to create a self-regulatory trade body for the industry, which lets members of the public back start-up businesses.
Members of the UK Crowdfunding Association (UKCFA) will have to comply with a code of practice to protect investors’ funds and keep them separate from the companies’ own money.
Accounting firm Deloitte estimates the crowdfunding sector will help firms raise about £1.9 billion this year. The National Endowment for Science, Technology and the Arts predicts that could soar to about £15bn within five years.
Trillion Fund managing director Julia Groves has been appointed the UKCFA’s first chair and said the organisation’s launch was a “milestone” for the industry.
She added: “Our sector is already providing real value in the provision of capital.”