People are being warned about the possible dangers of investing in crowdfunding projects, following the news that a fifth of all ventures fail.
The form of alternative finance has been popularised by websites such as Kickstarter and a growing number of companies who have struggled to secure traditional loans have signed up to the model.
But new data compiled from Companies House records shows the challenges facing this type of start-up.
Between 2011 and 2013, around 20 per cent of the 367 businesses who raised money through crowdfunding went bust.
In addition, less than a quarter have gone on to raise funds at a higher valuation or realised a return for those who originally put money in.
This has prompted fresh warnings about the possible danger to people who invest their savings in the projects.
Last month, Tracey McDermott, acting head of the Financial Conduct Authority (FCA) told MPs that she didn’t have figures to hand for the level of losses suffered by investors through crowdfunding platforms – although this was before the latest research came to light.
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