A Guide to UK Small Business Crowdfunding

Crowdfunding helps UK small businesses raise funds from many people online. It’s a popular way to start or grow a business without traditional loans.

What Is Crowdfunding?

Crowdfunding is when many individuals contribute small amounts of money to support a business or project. Instead of one large investor, you get funds from a “crowd” through online platforms. It’s ideal for startups, creative projects, or businesses needing capital for growth. In 2023, the global crowdfunding market was worth $1.41 billion, with the UK as a top market.

Why Use Crowdfunding for Your Business?

Crowdfunding offers unique benefits for small businesses:

Access to Funds: Reach investors without bank loans or personal savings.
Market Testing: Gauge demand for your product before launching.
Brand Awareness: Build a community of supporters who spread the word.
Low Risk: Many platforms let you keep funds even if you don’t hit your goal.

Learn more about managing startup costs in our Small Business Budgeting Guide.

Types of Crowdfunding for UK Small Businesses

There are four main types of crowdfunding. Each suits different business needs.

1. Rewards-Based Crowdfunding

Backers receive non-financial rewards, like products or discounts, for their support.

Best for creative projects or product launches.
Examples: Kickstarter, Indiegogo, Crowdfunder.

2. Equity-Based Crowdfunding

Investors get shares or a stake in your business in exchange for funds.

Ideal for startups seeking growth capital.
Examples: Seedrs, Crowdcube.

3. Debt-Based Crowdfunding

Investors lend money, and you repay with interest over time.

Suits businesses with steady cash flow.
Example: Funding Circle.

4. Donation-Based Crowdfunding

People donate without expecting rewards, often for social or charitable causes.

Best for community projects or businesses with a social mission.
Example: GoFundMe.

Top Crowdfunding Platforms for UK Small Businesses in 2025

Here are the best platforms for UK small businesses, based on features, fees, and success rates.

1. Kickstarter

Focus: Creative projects like art, tech, or products.
Model: All-or-nothing (you must meet your goal to get funds).
Fees: 5% platform fee + 3-5% payment processing.
Pros: Large global audience (over 15 million users).
Cons: Not ideal for non-creative businesses.
Best For: Product launches or creative ventures.

2. Indiegogo

Focus: Tech, creative, and nonprofit projects.
Model: Flexible (keep funds even if you don’t meet your goal) or fixed funding.
Fees: 5% platform fee + 2.9% + £0.30 per transaction.
Pros: Offers InDemand for post-campaign funding.
Cons: High competition due to global reach.
Best For: Tech startups or multi-stage projects.

3. Crowdfunder

Focus: Community projects, small businesses, and social causes.
Model: Rewards-based, with +Extra Funding for matched grants.
Fees: 3.6% platform fee + 2-3.9% transaction fee. Free for charities.
Pros: Supports local UK businesses with grants.
Cons: No equity or debt options.
Best For: Cafes, pubs, or community-focused ventures.

4. Seedrs

Focus: Equity crowdfunding for startups.
Model: Investors get shares; nominee structure simplifies management.
Fees: 6% on first £150,000, 4% on next £300,000, 2% above £500,000 + £2,500 completion fee.
Pros: Access to high-net-worth investors.
Cons: Complex for first-time entrepreneurs.
Best For: High-growth startups.

5. Crowdcube

Focus: Equity crowdfunding for startups and growing businesses.
Model: Investors become shareholders; minimum investment £10.
Fees: 7% on successful campaigns.
Pros: Raised over £1 billion for UK businesses.
Cons: Public failure can harm reputation.
Best For: Established businesses seeking expansion.

6. Funding Circle

Focus: Debt-based crowdfunding for small business loans.
Model: Borrow up to £500,000 (unsecured) or £1 million (secured).
Fees: 0.9-6% based on loan term.
Pros: Fast, streamlined loan process.
Cons: Requires repayment with interest.
Best For: Businesses with reliable revenue.

7. GoFundMe

Focus: Donation-based crowdfunding for personal or social causes.
Model: Keep all funds raised, no goal required.
Fees: 2.9% + £0.30 per donation.
Pros: Easy to use, trusted platform.
Cons: Less suited for commercial projects.
Best For: Businesses tied to social causes or recovery.

How to Run a Successful Crowdfunding Campaign

A successful campaign needs planning and effort. Follow these steps to boost your chances.

1. Choose the Right Platform

Pick a platform that matches your business type and goals. For example, use Kickstarter for creative projects or Seedrs for equity funding. Research past campaigns on the platform to see what works.

2. Set a Realistic Goal

Set a funding target you can achieve. Most successful campaigns raise £5,000-£50,000. Be clear about how you’ll use the funds.

3. Create a Compelling Pitch

Your pitch should explain:

What your business does.
Why it matters.
How funds will help.
Include a video—campaigns with videos raise 105% more funds.

Image Suggestion: A screenshot of a successful crowdfunding campaign page with a clear pitch and video.
AI Image Prompt: “Generate a mock-up of a crowdfunding campaign page for a UK small business. Show a clean layout with a bold headline, a short pitch, a video placeholder, and a progress bar showing £10,000 raised of a £15,000 goal. Use a professional design with blue and white colors and a modern font.”

4. Offer Attractive Rewards

For rewards-based campaigns, offer perks like:

Early access to products.
Discounts or exclusive items.
Personalized thank-yous.
Tier rewards based on donation size.

5. Market Your Campaign

Promote your campaign through:

Social media (Facebook, Instagram, LinkedIn).
Email newsletters.
Local events or PR.
Use tools like Crowdreach or Gadget Flow for extra reach.

6. Communicate with Backers

Update supporters regularly. Share progress and thank them. This builds trust and encourages more pledges.

Internal Link Suggestion: For marketing tips, see our Small Business Marketing Strategies.

Pros and Cons of Crowdfunding

Pros

Raise funds without loans or giving up control.
Test your idea’s market fit.
Build a loyal customer base.

Cons

Campaigns take time and effort.
Public failure may harm your brand.
Fees can reduce your funds.

Key Considerations for 2025

Regulations: Equity crowdfunding is regulated by the UK’s Financial Conduct Authority (FCA). Ensure your platform complies.
Tax Relief: Investors in equity crowdfunding may qualify for SEIS or EIS tax relief, raising up to £150,000 or £5 million.
Trends: Video content is critical. Blockchain is emerging for secure transactions. Niche platforms for specific industries are growing.

External Link Suggestion: Learn about SEIS/EIS tax relief at British Business Bank.

Final Thoughts

Crowdfunding is a powerful tool for UK small businesses in 2025. It offers a way to fund your venture, test your market, and build a community. Choose the right platform, craft a clear pitch, and promote actively to succeed. With careful planning, crowdfunding can help your business grow without relying on traditional financing. Start researching platforms today and turn your idea into reality.

Hot topics

Finance

Marketing

Politics

Strategy