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The phenomenon of crowdfunding , the collective effort of a large number of individuals who network and pool their resources, is growing exponentially in popularity as a way to fund software development, scientific research, arts projects, small businesses and, through companies like The House Crowd, property investment.
Despite the groundswell of support from the public and politicians and legislation being passed in the USA in April to allow crowdfunding, the FSA have taken a different view describing crowdfunding this week as “risky and complex”. It published a report informing consumers that most crowdfunded investment opportunities are unregulated.
According to the document, crowdfunding should be reserved for sophisticated investors, those who understand the apparent risks associated with crowdfunding and who accept they may lose their money if the business they helped to fund fails.