Investing in practice
How to evaluate a crowdfunding deal: a checklist
A crowdfunding deal can be checked with the same 11 questions each time, among them who runs the platform and the company, what you are buying and at what price, what the money is for, how far you can be diluted and how you would ever get out. As of 4 Nov 2026 the checklist comes from the questions regulators and filing forms ask, and it can tell you what an offer says but not whether it will succeed, so you can tick every box and still lose everything.
Not investment advice. Early-stage investing is high-risk and illiquid; you may lose all the capital you invest.
1. Is the platform registered, and in good standing?
A listing alone is not enough. FINRA's list (opens in a new tab) held 73 funding portals when we read it, and nine carried suspension notices, so the entry itself needs reading. There is a separate list of former members (opens in a new tab), some statutorily disqualified.
In the UK, the Firm Checker (opens in a new tab) shows whether a firm is authorised and for what, and the Register (opens in a new tab) adds fuller history, including clone firms. In the EU, ESMA's register (opens in a new tab) lists providers and the authority that authorised them. In Australia, a provider needs an Australian financial services licence (opens in a new tab). Our platform directory lists the platforms we track.
2. Who is behind the company?
A Form C has to name directors and officers (opens in a new tab), three years of their experience, and holders of 20% or more. The bad-actor rule (opens in a new tab) covers the company, directors, officers, 20% holders, promoters and paid solicitors. FINRA's advice (opens in a new tab) is to read every disclosure, ask direct questions, get a second opinion and search the people yourself.
A platform may not have done it all. A US platform must run a background and regulatory check (opens in a new tab), but the FCA's standard risk summary (opens in a new tab) warns that checks may not have been carried out and tells investors to do their own research, and ASIC says an intermediary's checks are not comprehensive (opens in a new tab).
3. What are you actually buying?
Shares, a note or a SAFE, and with what rights. The Form C's questions 13 to 16 (opens in a new tab) cover terms, voting, limits and how they can be changed, and Part F of the EU sheet (opens in a new tab) sets out the rights, transfer limits and exit options. SAFE vs equity vs convertible note in crowdfunding shows what to read for.
4. Does the price make sense?
No regulator tells you what a fair price is, but the form asks (opens in a new tab) how the securities are valued. The SEC's glossary (opens in a new tab) notes that valuations are often expressed as pre-money, and mentions the difficulty of valuing a company early in its life. With a cap or discount the sum works differently, and the same glossary says a SAFE generally states no valuation at issue.
Some questions to put to the figures: how does the valuation compare with revenue on the same form (opens in a new tab), how does it compare with the last round, and who set it?
5. What will the money be used for?
Read for specifics. Question 10 (opens in a new tab) asks for detail on the use of proceeds, and at both the target and any higher amount. ASIC's template (opens in a new tab) separately shows payments to related parties and the intermediary. Money going to people rather than the product belongs in the same reading, as do the related-party deals in Question 26 (opens in a new tab).
Whether the founders have money in it is worth a look too. The EU sheet's Part B (opens in a new tab) states the target, the deadline and what the project owner has committed itself, and a raise that misses a stated minimum does not take your money: in the US, the platform directs its return (opens in a new tab) within five business days.
6. How much can you be diluted?
Usually more than once. The FCA's risk summary (opens in a new tab) says your share of the business will decrease if it issues more shares, that new shares could have additional rights, and that most start-ups issue multiple rounds. Questions 18 and 23 (opens in a new tab) of the Form C cover how your rights can be diluted and what the company may do. The Australian warning (opens in a new tab) says the same of value. The EU sheet must show voting and capital before and after (opens in a new tab) the raise.
7. What do the accounts show, and who checked them?
Revenue, debt, cash and net income are on the form's own table (opens in a new tab), for two years. Whether anyone independent looked at them depends on the amount offered: How to read a Form C in 10 minutes has the tiers, and shows where a raise's debts and past raises are stated.
8. How would you ever get out?
By a sale of the company, a listing or a secondary market, if there is one. The FCA's summary (opens in a new tab) says dividends are paid very rarely. Check the transfer limits in the document (opens in a new tab), and whether your platform offers a route: How to sell crowdfunded shares sets them out. Our exits pages show what has happened in named cases, including those where the crowd lost out.
9. What will it cost you?
The FCA's page (opens in a new tab) lists fees and taxes among the things to check, and Part H of the EU sheet (opens in a new tab) covers fees and complaints. Platforms charge differently, on the way in, on the way out, and as carry on profit, so each platform's own terms are where to read them.
10. How much can you afford to lose?
All of it, on the regulators' reading. The EU sheet (opens in a new tab) advises against investing more than 10% of your net worth, and the FCA's summary (opens in a new tab) against more than 10% of your money in high-risk investments. In the US a hard limit applies if you are not accredited. And Beauhurst's figures, in What happens to your shares when a crowdfunded company fails, show how often it goes wrong.
11. Can you still change your mind?
The window is short. US investors can cancel until 48 hours before the deadline (opens in a new tab), a non-sophisticated EU investor has four calendar days (opens in a new tab), and Australia's retail investors have five days (opens in a new tab). Our lists of raises closing this week and live raises run on each raise's clock and not yours. We track 713 at the moment, and What is equity crowdfunding? covers the regimes behind them.
Frequently asked questions
Does this checklist tell you which deal to choose?
No. It shows what the documents should say (opens in a new tab), and we give no view on any company. Our statistics show what the market as a whole has done, which says nothing about any one raise.
Has anyone checked the offer for you?
Not in full. The Form C says the SEC does not pass on the merits (opens in a new tab), and an EU sheet says the offer is neither verified nor approved (opens in a new tab) by the authorities.
Is a platform's selection a recommendation?
No. FINRA says funding portals cannot give advice (opens in a new tab) or solicit purchases, and the FCA's summary (opens in a new tab) warns that checks may not have been carried out.
What is the single most important check?
There isn't one, as each can sink a deal alone. If you only have 10 minutes, How to read a Form C gives an order to read in.
Sources
- SEC, Form C (opens in a new tab)
- SEC, Cutting through the jargon: a glossary (opens in a new tab)
- 17 CFR 227.301, what a platform must check (opens in a new tab)
- 17 CFR 227.304, cancelling a commitment (opens in a new tab)
- 17 CFR 227.503, bad actors (opens in a new tab)
- FINRA, What investors should know about crowdfunding (opens in a new tab)
- FINRA, Funding portals we regulate (opens in a new tab)
- FINRA, Former funding portal members (opens in a new tab)
- FCA, Understanding crowdfunding (opens in a new tab)
- FCA, Firm Checker (opens in a new tab)
- FCA, Financial Services Register (opens in a new tab)
- FCA Handbook, COBS 4 Annex 1R: risk summaries (opens in a new tab)
- Regulation (EU) 2020/1503 on crowdfunding service providers (opens in a new tab)
- ESMA, Databases and registers (opens in a new tab)
- ASIC, Crowd-sourced funding (opens in a new tab)
- ASIC, CSF offer document template (opens in a new tab)
- ASIC, RG 262: guide for intermediaries (opens in a new tab)