Rules and ethics
Part of Startup funding rules and ethics: an England checklist
Startup funding advertising rules: a practical checklist
A practical checklist of startup funding advertising rules: check UK exemptions and approval, verify firms, substantiate claims and get EIS/SEIS wording right.
Use this startup funding advertising rules checklist before a UK fundraising promotion goes live: identify the legal route, verify any approver and keep evidence for every claim.
What to take away
- Section 21 of the Financial Services and Markets Act 2000 restricts financial promotions, so record a documented assessment before publishing.
- A "sophisticated investors only" label does not create an exemption; the recipient, process, wording and evidence decide the position.
- Split historic results, signed contracts, pipeline and forecasts, and state the basis for each projection beside the number.
- State whether EIS or SEIS advance assurance has been obtained and its date, and explain that assurance does not commit investors.
- Archive wording, approvals, audience settings and link destinations, then set a review date for financial and tax content.
Where the rules sit
The Financial Services and Markets Act 2000 (FSMA) contains the section 21 restriction: a person must not, in the course of business, communicate an invitation or inducement to engage in investment activity unless an authorised person communicates it, an authorised person approves it, or an exemption applies. The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (FPO) sets out exemptions; examples include Article 48 for certified high-net-worth individuals, Article 49 for high-net-worth companies, and the FPO's certified and self-certified sophisticated investor exemptions, each subject to its conditions. Section 21(2) covers approval by an authorised person; where required, the approving firm must also have the FCA's permission to approve financial promotions under section 55NA FSMA. The FCA's Perimeter Guidance manual, PERG 8, explains the restriction and exemptions; check the exact route and its conditions before drafting.
Start with scope and authority.
- Save the final wording, images, link destination, audience and distribution plan.
- Name who issues, communicates, approves and pays for the material.
- Record the documented section 21 assessment.
- If relying on an FPO exemption, name the article and record how the recipient, process and wording meet its conditions.
- Check the firm's identity and relevant permissions, including permission to approve financial promotions where required, on the FCA Financial Services Register.
Scope and authority checks
- Save final wording, images, links, audience
- Identify issuer, communicator, approver, payer
- Document section 21 assessment
- Record exemption and why conditions met
- Verify authorised firm identity and permission
For broader context, see the UK startup funding compliance guide; use the statutes and FCA and HMRC materials named in this checklist for the applicable legal requirements.
Example: compliant and non-compliant advert wording
| Non-compliant wording | Why it fails | Compliant alternative |
|---|---|---|
| "Guaranteed 3x return in 24 months" | Promises a return and a fixed exit | "Target return depends on exit timing and valuation; capital is at risk" |
| "EIS approved by HMRC" | Suggests HMRC approves the offer | "HMRC advance assurance was granted for this share issue; it does not commit investors or guarantee relief" |
| "Sophisticated investors only" | Treats a label as an exemption | "Directed at certified high net worth and self-certified sophisticated investors; eligibility is assessed before acceptance" |
Each compliant version states a fact, a limit or a date rather than a promise. The figures and dates in the examples below are illustrative only, not publishable copy: replace them with verified particulars before use.
Evidence for results, contracts, pipeline and forecasts
Keep the four categories apart. For each, record the specific source and date; state the assumptions and basis for a projection beside it.
| Category | Sample phrasing |
|---|---|
| Historic results | "Revenue of £1.2m in the year to 31 March 2026, audited by an independent firm" |
| Signed contracts | "Three signed contracts worth £450,000 in total, delivery starting in January 2027" |
| Pipeline | "£2m of pipeline at 30 June 2026, weighted at 20%, none contracted" |
| Forecasts | "Forecast revenue of £3m by December 2027, assuming two new sales hires and a 15% lead-to-customer conversion rate" |
State the basis for projections beside them. Source any market size, growth or regional claim. Avoid guarantees about returns, exits, EIS, SEIS or future valuation.
The CAP Code, administered by the Advertising Standards Authority (ASA), section 14 covers understandable offers, material limits and charges, projection bases, investment variability and past performance. CAP Code section 3 covers misleading claims, omissions and substantiation.
Risk, cost and commercial terms
- Describe loss, illiquidity, dilution and company-failure risk accurately.
- Check the wording and placement of any required warning.
- State the actual amount, basis and timing of any fees, charges and commission, and material withdrawal terms; do not use a generic claim in place of the amount.
- Identify the guarantor and the limits where a guarantee exists.
- Do not let a headline contradict the detailed risk statement.
A funding budget that includes dilution helps you price the costs you must disclose, instead of quoting a headline that quietly omits them.
Audience, placement and social media
- Define who can lawfully receive the communication.
- Prevent uncontrolled forwarding where distribution must be restricted.
- Check every landing page and document reached through the advert.
- Give affiliates and influencers approved material and monitoring rules.
The FCA's social media promotions guidance covers firms, promoters and influencers, and a short caption does not remove the need for the promotion to work as a whole.
Treat a founder's personal account as part of the campaign when it is used for it, and record which account posted what.
EIS and SEIS wording
State once whether advance assurance has been obtained and its date, then explain that assurance does not commit investors and does not guarantee relief for every recipient. Obtain tax and legal review of scheme statements. Update the promotion when transaction facts change.
After the share issue, submit the applicable EIS1 or SEIS1 compliance statement to HMRC; this is separate from advance assurance. HMRC's venture capital scheme statistics describe scheme activity across the UK, not approval of a particular promotion or investment. Keep the assurance letter and its date with the archived promotion.
Release control and review dates
Archive evidence, advice, approval, audience settings and the published version. Monitor comments, affiliates and changed landing pages. Pause distribution when a claim becomes stale or a condition changes.
Test the advert on the device and channel where people will see it. Record the headline, image, warning, caption, link preview, destination page and download. A qualification that appears only after several clicks may not repair the impression created at the start.
Set an expiry or scheduled review date for financial figures, investor status, deadlines and tax scheme wording. Remove old paid adverts and reusable affiliate assets, not just the main website.
If you need a source list for archived records, the UK startup funding data and records guide gives each source a best use and a date.
Common questions
Does labelling a promotion for sophisticated investors only make it exempt?
No. The label does not change the legal result. PERG 8 lists the exemptions, and the recipient, process, wording and evidence decide whether one applies.
What should be checked on the landing page and across the journey?
Check every landing page and document reached through the advert. Record the destination page, any download, and the link preview that appears in the channel you use.
How should projections, signed contracts and pipeline be presented?
Keep the four categories apart. State the basis for every projection beside it, label pipeline as uncontracted, and give the date and any weighting applied.
Where can I read the FCA PERG 8 and CAP Code texts?
PERG 8 sits in the FCA Handbook. The CAP Code is published by the ASA, with section 14 on investments and section 3 on misleading claims and substantiation.
