Why Tokenisation Might Finally Democratise the Dealflow Network Problem
Updated: Oct 7
Startup funding has always rewarded proximity as much as quality. Tokenisation raises a quieter question: does it have to?
One of the less openly discussed realities of early-stage fundraising is just how dependent it remains on networks.
On the surface, venture capital presents itself as a meritocratic system. Strong businesses attract investment. Compelling founders secure backing. The best opportunities rise to the top. In practice, the picture is more complicated.
It is not uncommon to see two founders building businesses of comparable quality, operating in similar markets, with equally credible strategies and traction, yet experiencing fundraising journeys that look entirely different. One progresses quickly, gaining access to the right investors and maintaining momentum through the process. The other struggles to get in front of decision-makers at all, despite having a business that would stand up to scrutiny. The difference is rarely the strength of the opportunity. More often, it comes down to access: to investors who are active and aligned, to introductions that carry weight, to the conversations where decisions are actually made.
This dynamic has always been part of how venture capital functions. Relationships matter.
Trust is built over time. Investors rely on pattern recognition and signals from their networks to filter deal flow, and none of that is inherently flawed. In many ways, it is what allows the system to function efficiently at scale.
But it does mean that opportunity is not evenly distributed. Founders who sit within established networks, whether through prior experience, geography, or existing connections, tend to move through the process with greater ease. Those operating outside those circles often spend significant time and energy trying to access the same conversations, even when the underlying quality of their business is strong.
This imbalance has not gone unnoticed. Crowdfunding platforms, syndicates, and online investor communities have all attempted, in different ways, to broaden participation and reduce reliance on closed networks. Each has made progress. None has fundamentally reshaped the structure of access.
Logically, democratisation via tokenisation should help to address elements of the dealflow network problem but it's still early days and the models and approaches are evolving. At its core though, the process does prompt an important question: if ownership in a company can be represented digitally and managed through new forms of infrastructure, could access to investment opportunities become less dependent on informal networks over time?
This is not an argument for unrestricted access. Regulation will continue to define who can invest, under what conditions, and with what protections. Nor does it diminish the importance of trust, judgement, and due diligence, which will always sit at the heart of early-stage investing. What it may begin to influence is how opportunities are surfaced and how investors engage with them. Discovery could become more transparent. The process of accessing an opportunity might become less dependent on proximity to the right people and more dependent on the quality and clarity of the opportunity itself.
Looking ahead, tokenisation might finally democratise the dealflow network problem but right now for founders, this is not an immediate replacement for traditional fundraising. The existing system still remains dominant and will do so for some time. But it is clear that the balance between networks and infrastructure is shifting. For those paying attention now, understanding that shift early is likely to be valuable, even while the practical implications are still taking shape.
The network has always been the product. The more interesting question is whether that has to remain true.
What the data says about access
The network problem shows up in where money lands. The British Business Bank's Small Business Equity Tracker, published on 2 July 2026, found that UK smaller businesses raised £12.3 billion of equity in 2025, down 4% on the year. London took 57% of investment value, down from 60% in 2024 but still more than every other region combined.
Capital is also concentrating by deal. The ten largest fundraisings accounted for 23% of all investment, the highest share since 2020, and AI companies took a record 44%. There were bright spots outside the capital, with investment up 82% in the North West and 74% in Scotland, but the overall pattern is one of money following existing clusters and the networks around them.
What it means for UK founders
Tokenising a share register does not change who a founder is allowed to pitch to. In the UK, an invitation to invest in private company shares is a financial promotion, and it must either be approved by an FCA authorised firm or fall within an exemption, such as those for certified high net worth or sophisticated investors. The government raised the high net worth thresholds in January 2024 and then reversed the change in March 2024, restoring the £100,000 income and £250,000 net asset tests. Discovery can widen, but the audience a founder may lawfully approach stays the same.
Where infrastructure is starting to shift access is liquidity. On 26 August 2025 the FCA approved the London Stock Exchange as the first operator under PISCES, the Private Intermittent Securities and Capital Exchange System, which lets shares in private companies trade in periodic windows. PISCES runs as a sandbox, with a permanent regime expected around 2030. A credible route to sell shares before an exit could, over time, make private company stakes more attractive to investors outside a founder's immediate circle.
Founders considering a digital or tokenised raise may want to take professional advice on the financial promotion rules before sharing any offer publicly.
Key facts at a glance
UK smaller business equity investment in 2025: £12.3 billion, down 4% year on year.
London's share of investment value: 57% in 2025, down from 60% in 2024.
Top ten fundraisings: 23% of all investment, the highest share since 2020.
First PISCES operator: London Stock Exchange, approved by the FCA on 26 August 2025.
High net worth investor exemption: £100,000 income or £250,000 net assets, restored in March 2024.
Sources
Frequently asked questions
What is the dealflow network problem in startup fundraising?
Early-stage fundraising remains heavily dependent on networks. Founders with businesses of comparable quality can have very different fundraising journeys, because access to active investors, strong introductions and the right conversations is not evenly distributed.
Could tokenisation democratise access to startup investment?
Possibly, over time. If company ownership can be represented digitally and managed through new infrastructure, discovery could become more transparent and access less dependent on informal networks, but it is still early days and the models are evolving.
Will tokenisation replace traditional startup fundraising?
Not immediately. The existing system remains dominant and will do so for some time, and regulation will continue to define who can invest, under what conditions and with what protections.
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