A new rating business is set to check that claims made by crowdfunding campaigns are fair and true.
Crowdrating, founded by former Interactive Investor boss Alex Heath and AngelNews founder Modwenna Rees-Mogg, uses 60 pieces of data to supply campaigns with a rating.
It means businesses making false, or ludicrously over-the-top claims about their business, could become a thing of the past.
In addition to financial information gathered from Companies House and credit ratings, the product itself and the management team are assessed. For instance, experienced entrepreneurs will have a higher score that a first-time crowdfunder.
In the near future, it plans to provide a rating for every campaign on three on of the UK's main crowdfunding platforms; Crowdcube, Seedrs and Syndicate Room.
Co-founder Modwenna Rees-Mogg said: "As it stands, investors are reliant on the information provided by the issuing company typically via the crowdfunding platform. There is no independent validation, let alone regulated comment by experienced analysts available to investors. We know that the platforms themselves recognise that properly independent research is necessary for the market to mature successfully.”
Importantly, Crowdrating will offer businesses a right to reply to their score. It's published for free and gives the campaigner a chance to argue their case for their particularly strong claims.