What Ten Years of Equity Crowdfunding Returned to Founders and Backers
The model widened who could invest. The next one has to fix what it left unsolved: liquidity, selection, and the cost of staying in.
Ask a founder in Sheffield or Swansea how they raised their first two hundred thousand pounds, and a fair number will give you the same answer. Not a fund. Not an angel syndicate met at a London dinner. A crowd.
Over the past decade, equity crowdfunding did something the venture industry never managed. It let ordinary people back companies they believed in, and it let founders raise from their own customers and communities rather than from a narrow set of gatekeepers. Crowdcube and Seedrs, now Republic Europe, turned a niche idea into a mainstream route. That was a genuine shift in who gets to participate, and it deserves credit before any critique.
But there were conditions and with ten years of outcomes now in, the picture is more complicated than the marketing suggested.
What the returns actually look like
Start with the headline numbers, because they are better than the sceptics claim and weaker than the cheerleaders imply. Seedrs has reported an internal rate of return of roughly 9.84 per cent across diversified portfolios of a hundred investments or more, rising to about 20.78 per cent for the top quartile of investors. A later portfolio update put the figure at 12.91 per cent before tax relief, and 18.36 per cent once SEIS and EIS reliefs were applied. Crowdcube reported 13.27 per cent across investments made between 2012 and 2016.
Those are respectable figures. They come with three asterisks that matter enormously for any founder or backer reading them.
First, the returns depend on heavy diversification. The averages hold for people who spread money across a hundred or more companies. Most retail backers put cash into a handful of names they liked, which is a very different risk profile.
Second, a large slice of the return is tax relief, not company performance. Strip out SEIS and EIS and the underlying numbers soften.
Third, and most important, the money is locked up. Beauhurst found that of 685 deals on Seedrs and Crowdcube between 2013 and 2015, around 148 had collapsed within a few years, roughly one in five. The survivors, meanwhile, mostly kept growing in private, with no way for early backers to sell.
The wins, when they came, were spectacular and rare. Revolut handed its earliest crowd investors something close to a 400 times return at its 2024 valuation. Pod Point returned about 5.5 times when EDF acquired it. These are lottery outcomes, not the median experience, and a model that relies on the occasional Revolut to carry everyone else is not a model built for repeatable founder access.
The problem was never appetite
Here is the useful conclusion buried in that data. The demand side worked. Hundreds of thousands of people proved they will back early companies if you let them. What failed to keep pace was the plumbing.
Three structural gaps explain most of the disappointment.
Liquidity came first. Backers bought shares with no realistic way to exit for seven to ten years, sometimes never.
Selection came second. At the larger end, capital still clustered around the same profiles and the same postcodes, so the democratising promise thinned out as cheque sizes grew.
The third gap was the quiet one. The cost and friction of holding the position, sitting inside nominee structures and messy cap tables, made the whole thing feel less like ownership and more like a raffle ticket you could not cash.
None of those are problems of enthusiasm. They are problems of infrastructure. And infrastructure is finally starting to move.
What is changing now
The most concrete development is PISCES, the Private Intermittent Securities and Capital Exchange System. The FCA finalised its rules in June 2025 and is running the regime through a supervised sandbox until June 2030. In February 2026, the London Stock Exchange published the rulebook for its own PISCES venue, the Private Securities Market. The first live events have already happened, with JP Jenkins running a structured liquidity window for QPLAY and the LSE completing an early transaction linked to Oxford Science Enterprises.
PISCES does not let companies issue new shares, so it is not a fundraising tool in itself. It is a secondary market. But that is precisely the missing leg. Give early backers a periodic, regulated way to sell, and the calculus of backing a company early changes. Investors who know they are not locked in for a decade will commit sooner and more freely, which loops directly back to founder access. Liquidity for the backer is, in the end, availability of capital for the founder.
Tokenisation is the second strand. Issuing equity as digital securities can cut the cost and time of a round, automate the administrative drag of cap table management, and increase the reach which widens the pool of qualifying investors that a founder can reach within whatever regulatory perimeter applies. Put tokenised equity and PISCES style secondary trading together and you get something the crowdfunding era never had: a route to raise in increments, organically, without necessarily handing power to institutional investors through a traditional Series A, B, or C round.
That is the part founders should sit with.
Each priced round in the old model brought board seats, preferred terms, and liquidation preferences. A model where a founder can raise smaller amounts as needed, and give early supporters liquidity without forcing a full exit, is not just cheaper paperwork. It changes who holds power in a capitalised company.
It is worth being honest about the experiments that came before. DAOs and evergreen funds tried to ask a real question, whether capital formation could be fairer, more flexible, and less hostile to founders than the standard venture model. Many did not survive in their original form. The question they raised did survive, and tokenisation and PISCES are now advancing it in more durable, regulated ways.
Where this could lead
It is reasonable to look further out, as foresight rather than prescription. If the regulatory and market infrastructure continues to mature, better capital formation tools could matter most precisely where the old model reached least. A founder outside London, without a warm introduction or a prior fund relationship, has never been short of ideas or customers. They have been short of access. Cheaper issuance, broader investor reach, and real secondary liquidity start to chip at that, not by opening private markets to retail speculation, but by making it easier for the right qualified investors to find and back the right founders.
The crowdfunding decade settled one argument for good. The appetite to back early companies is large, durable, and far more widely distributed than the venture industry assumed. What it could not settle was how to make that appetite pay off reliably, for backers and founders alike. That is now an infrastructure question, and for the first time the infrastructure is being built.
Key takeaways
Equity crowdfunding delivered real but uneven returns, roughly 10 to 13 per cent IRR on diversified portfolios, heavily dependent on tax relief and a few outsized wins like Revolut.
The core weakness was never investor appetite. It was structural: no liquidity, persistent selection bias at scale, and the friction of holding illiquid private shares.
PISCES adds the missing secondary market, letting early backers exit through regulated trading windows, which in turn makes backing founders earlier more attractive.
Tokenised equity combined with PISCES points to organic, incremental raising that lets founders scale without surrendering control to a traditional priced round.
The real prize is regional and structural: better infrastructure could widen access for founders the old model consistently overlooked.
Sources: securities.io, Raise Capital; equity crowdfunding returns and survival data via Crowdwise and Beauhurst; FCA, PISCES regime; London Stock Exchange Private Securities Market.
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