Can anyone invest in my startup, or are there investor eligibility rules?
By SuLe · Updated 8 July 2026
There is no general rule stopping an ordinary person from owning shares — but there are strict rules on who you may lawfully promote the investment to. Section 21 FSMA restricts how you invite people to invest, so in practice your "eligible" investors are the people your chosen exemption or authorised platform lets you approach. The register is open; the promotion is not.
Key facts
- Company law does not bar ordinary people from owning startup shares; the constraint is the financial-promotion regime, not the register.
- Section 21 FSMA limits who you may promote a raise to, so your exemption or platform effectively defines your investor pool.
- Off-platform, most founders promote only to certified high-net-worth or sophisticated investors, with signed statements collected first.
- Ordinary retail investors usually invest via an FCA-authorised platform, where restricted investors self-limit to 10% of net investable assets and pass an appropriateness check.
- An unlawful promotion can be a criminal offence and can make the agreement unenforceable against the investor under section 30 FSMA.
Is it about who can own shares, or who I can ask?
It is about who you can ask. Nothing in company law generally stops an ordinary individual from holding shares in your startup — plenty of small shareholders sit on plenty of cap tables.
The real constraint sits one step earlier, in how you invite the investment. Section 21 FSMA restricts financial promotions, so the question is not "who is allowed to own shares?" but "who may I lawfully promote this raise to?"
That reframing matters. Founders sometimes think there is a legal list of permitted investors; in reality, the exemption or platform you use is what determines your lawful audience.
What actually decides who can invest?
Your promotion route. If you rely on the high-net-worth or sophisticated-investor exemptions, your pool is limited to people who genuinely fit those categories and have signed the prescribed statement before you promoted to them.
If you use an FCA-authorised crowdfunding platform, the platform's categorisation and appropriateness checks decide who can invest — including ordinary retail investors it has assessed. The authorisation, not your judgement, opens the door to a wider audience. [More: How does equity crowdfunding work legally in the UK?]
So "eligibility" is really the intersection of your exemption and your paperwork. Change the route, and you change who you may lawfully approach.
Can ordinary retail investors take part?
Yes, but mainly through the authorised-platform route. On an FCA-authorised crowdfunding platform, restricted (ordinary retail) investors can invest after confirming they will not put more than 10% of their net investable assets into high-risk investments, and after passing an appropriateness check.
Off-platform, promoting an equity raise directly to ordinary retail investors generally needs an authorised firm's approval, which most founders do not have. That is why direct founder raises tend to stick to the high-net-worth and sophisticated-investor exemptions.
The 10% self-limit and the appropriateness check exist precisely because retail investors get less protection than professionals — the rules build in friction rather than a flat ban. [More: Who counts as a high-net-worth or sophisticated investor?]
| Investor | Can they invest? | Usual lawful route |
|---|---|---|
| Certified high-net-worth individual | Yes | Direct exemption — signed HNW statement first |
| Certified/self-certified sophisticated | Yes | Direct exemption — signed statement first |
| Ordinary retail investor | Yes, with protections | FCA-authorised platform; restricted category, 10% self-limit |
| Existing shareholder / close relationship | Sometimes | Narrow FPO exemptions — confirm scope with a solicitor |
| Overseas investor | Often, with care | UK rules still apply; check their home-country rules too |
Worked example
Raj is raising £200,000 for an edtech startup and has a mix of interested people: two angels, a former colleague who works in venture, and several enthusiastic teachers from his user base who each want to put in a few hundred pounds.
The angels and the ex-colleague can be approached under the sophisticated-investor exemption, once they sign the statement. The teachers are ordinary retail investors — Raj cannot lawfully promote a direct offer to them himself.
So he splits the raise: the certified investors come in directly, with signed statements on file collected before he sent the deck, while the retail supporters are directed to an FCA-authorised platform that can assess and accept them. His solicitor confirms the split before any offer goes out.
Where founders go wrong
Thinking there's an "approved investor list"
— there isn't; your exemption and paperwork define who you may lawfully approach.Taking retail money directly
— promoting a direct offer to ordinary retail investors usually needs an authorised firm; use a platform instead.Treating enthusiasm as eligibility
— a keen investor you reached unlawfully is still an unlawful promotion, with section 30 consequences.Assuming UK exemptions cover overseas investors
— the investor's home country may impose its own rules, so take advice on cross-border approaches.
Related questions
Can anyone legally own shares in my startup?
There is no general rule stopping an ordinary person from owning shares. The restriction is on who you may lawfully promote the investment to. Section 21 FSMA limits how you invite people to invest, so the practical eligibility question is who your chosen exemption or platform lets you approach.
So what actually limits who can invest?
The financial-promotion regime. If you rely on the high-net-worth or sophisticated-investor exemptions, you may only promote to people who fit and have signed the statement. If you use an authorised platform, its categorisation and appropriateness checks decide who can invest. The exemption defines your pool.
Can ordinary retail investors invest at all?
Yes — mainly through an FCA-authorised crowdfunding platform. There, restricted investors typically confirm they will not invest more than 10% of their net investable assets in high-risk investments, and pass an appropriateness check. Off-platform, promoting to ordinary retail investors generally needs an authorised firm's approval.
Can I take money from anyone who offers it?
Being offered money is not the issue; how you invited it is. If you promoted the raise unlawfully to reach that person, the promotion breaches section 21 even if they are keen — and under section 30 the agreement can be unenforceable against them. Confirm the route before you accept.
Do overseas investors change the rules?
They can add layers. UK financial-promotion rules still apply to promotions made from or into the UK, and the investor's own country may impose its own securities and tax rules. Take advice before promoting a UK raise to investors abroad rather than assuming UK exemptions cover it.
The people you may lawfully invite to invest are defined by the exemption or platform you use — not by who happens to be keen — and reaching the wrong audience turns a raise into a criminal exposure. A SuLe solicitor can map your interested investors to the right route and paperwork. Book a free call before you promote your raise and keep every conversation on-side.
Keep reading: Who counts as a high-net-worth or sophisticated investor? · How does equity crowdfunding work legally in the UK? · Can I publicly advertise that my startup is raising money? · What is a financial promotion and when do the rules apply to founders? · Can I raise money from friends and family legally?
Primary sources: Financial Promotion Order 2005 · Financial Services and Markets Act 2000, section 21 · FCA — Financial promotions and adverts
