InvestingZone has launched a new crowdfunding platform that will enable early stage small businesses to raise online investment and allow private investors to buy shares in unlisted UK companies.

According to InvestingZone, a number of startups have already listed their details on the platform and company sectors include clean-tech, software-as-a-service companies, media and ecommerce.

Investors will also be able to tap into tax incentives, such as the Seed Enterprise Investment Scheme.

Crowdfunding involves the collective effort of individuals who pool their money to support initiatives of other people and organisations. Relatively new in the UK, the market is small, especially compared to the US.

Private investor backers include fund manager E-Synergy and venture capitalist Jon Moulton, chairman of Better Capital.

“The platform provides a real opportunity for a new method of raising money at a sensible cost. Poor returns on savings, coupled with great tax incentives, can make unlisted equities an attractive proposition. Good UK prospects are going unfunded and InvestingZone can bridge this gap to connect investors with opportunities," said Moulton.

Last year, the Financial Services Authority said that crowdfunding should only be targetted at sophisticated investors who "know how to value a startup business, understand the risks involved and are aware they could lose all their money". The FSA also warned that crowdfunding investment was likely to come with a greater risk and that higher returns were rare.