Do you have to pay back crowdfunding money?

"Crowdfunding" covers four quite different funding models, and whether you owe anyone money afterwards depends entirely on which one you use.

The four types

• Donation crowdfunding: supporters give money with nothing expected back. No repayment. Charities often use this model and may be able to add Gift Aid to donations.
• Reward crowdfunding: backers pay in exchange for a promised reward — early product, credits, merchandise. You do not repay the money, but you are committed to delivering the rewards, so cost them realistically.
• Equity crowdfunding: investors receive shares in your company. There is no repayment, but you have permanently given away a slice of ownership — and UK equity platforms are regulated by the Financial Conduct Authority.
• Debt crowdfunding (peer-to-peer lending): this is a loan. It must be repaid with interest according to the loan agreement, exactly like borrowing from a bank.

Costs and conditions to factor in

Even "free" crowdfunding money is not cost-free. Most platforms charge 3–8% of funds raised, plus payment processing fees of around 1.5–2.5%, and equity platforms may add fees for legal documentation and nominee services. Some platforms only charge if your campaign succeeds — read the fee schedule before choosing.

Also check the funding model: all-or-nothing campaigns refund every pledge if you miss your target, while flexible funding lets you keep whatever you raise. All-or-nothing creates more urgency and suits projects that cannot proceed on partial funding.

If you are considering the equity route, plan well ahead: most platforms require SEIS or EIS Advance Assurance from HMRC before they will approve your campaign, because without it investors cannot rely on their income tax and loss reliefs. Apply typically 8 to 12 weeks before your planned launch. And whatever the model, successful campaigns are rarely spontaneous — they are built on significant preparation and a pre-existing audience.