Raising for an ETA deal? Your investors could claim it all back, and more.

What I learned building Archimax, and what every searcher, sponsor and investor should check before money changes hands

Picture a searcher who raises £3,000,000 from a dozen investors. The deck goes out first, as it does in so many raises, and the investor statements come back later with the subscription forms. Two years on, the business is behind plan and one investor takes legal advice. They may be able to claim their money back, plus compensation, and so may every other investor who regrets the deal.

I’ve been an FCA-regulated approved person for most of my 26-year career, including as head of compliance at my previous firm. So when I set out to build Archimax, a platform that connects searchers with investors, I assumed I knew the rules. I did, for the world I came from, where the people on the other side of the table were professional investors, meaning institutions such as pension funds, banks, insurers and asset managers. What I hadn’t appreciated was how far those same rules reach once private individuals are writing the cheques.

It quickly dawned on me that Archimax would need to operate under FCA regulation, and I chose to do that as an Appointed Representative of Sturgeon Ventures LLP, a firm I’d worked with for over a decade. In plain terms, Sturgeon is the FCA-authorised firm that takes regulatory responsibility for what we do, and nothing we publish goes out without its sign-off, this article included. By its own account, Sturgeon was the first regulatory incubator in the City and has hosted more than 100 firms since. Most of what follows I learned working through the detail with them over the past eight months, and their rigour has been worth every awkward question. It’s also why Archimax is built the way it is, and I’ll come back to that at the end.

What surprised me, once I’d been through it, is how many searchers raise without any of this in place. The searchers I work with are mostly self-funded searchers and independent sponsors, alongside traditional search funds, buy-and-build holdcos and roll-ups. Plenty of raises across all five run cowboy style, with decks sent cold on LinkedIn, investor statements arriving with the subscription forms if at all, and in some cases a friendly adviser pulling the fundraising together for a fee. Most of the time nothing happens, but that isn’t the same as being fine.

Lesson 1: your deck is a financial promotion, wherever you send it from

If it invites someone to invest, it’s a financial promotion, and where you send it from doesn’t change that.

In the United Kingdom, any communication, in the course of business, that invites or induces someone to invest is a financial promotion (section 21 of the Financial Services and Markets Act 2000 (FSMA)). That covers the deck, the teaser, the one-pager, the data room and the LinkedIn message with the model attached. Unless you’re FCA-authorised, you can only communicate one if an authorised firm has approved it or it fits within a narrow exemption.

If you’re searching from the US or continental Europe and raising some of your equity from UK investors, this one is for you. A promotion sent from abroad is caught if it’s capable of having an effect in the UK (section 21(3) of FSMA). The deck you email from Madrid to an investor in London is treated much like one sent from Manchester, and it’s easy to go through a whole raise without anyone at home mentioning it.

Lesson 2: the signature comes before the deck

If the deck reached an investor before their signed statement, the exemption never applied to them.

For most searchers, the only exemptions within reach are those for certified high net worth individuals and self-certified sophisticated investors (Articles 48 and 50A of the Financial Promotion Order). They sound simple and they aren’t. Each investor has to sign a statement in a prescribed form before the deck reaches them, you need reasonable grounds to believe they meet the criterion, and the promotion itself has to carry prescribed wording. Miss any one of those and the exemption falls away for that investor.

If you’re a self-funded searcher raising from former colleagues, friends and angels, this is the lesson most likely to catch you. The natural sequence is deck, calls, term sheet, then a subscription pack with the investor statement somewhere near the back. That sequence is backwards, and every investor who saw the deck before signing sits outside the exemption. So does anyone they forwarded it to.

The NDA won’t save you either. The usual sequence is a teaser, then an NDA, then the full memorandum, and a teaser that invites investors to find out more is already likely to be a financial promotion. Even where the NDA comes first, it isn’t an investor statement. In my experience, the investor NDAs circulating in this market, from searchers, sponsors and accelerator programmes alike, are confidentiality documents and nothing more, usually the same template for every investor. They protect the information and do nothing about the promotion rules. Adding a line that says the material isn’t an offer or invitation to invest doesn’t help either, because it’s the substance of a communication that makes it a promotion, not its label.

To give you a sense of how seriously a regulated firm treats this, Sturgeon still checks and approves every investor certification on our platform before I can discuss or share anything with that investor.

Lesson 3: calling investors sophisticated doesn’t make them so

Wealthy and experienced isn’t the same as sophisticated or professional in law.

Most searchers assume the rules are written for someone else. Their investors are experienced, wealthy and clearly able to look after themselves, so surely none of this applies. But in regulatory terms, sophisticated and professional are defined, and a successful former boss usually isn’t either. The investment professionals exemption (Article 19 of the Financial Promotion Order) is also far narrower than its name suggests. It turns on whether the recipient is authorised, or carries on the specific kind of investment being promoted as part of its ordinary business, and the promotion has to be directed only at such people, say so on its face, and be backed by proper systems to stop it reaching anyone else. Whether a family office or an angel’s personal investment company qualifies depends on the facts, and it’s not a judgement to make on your own. Treating an individual as a professional client means they give up protections, which has to be justified by the facts of each investor. For most individuals, it comes back to the prescribed statement and all of its conditions.

Lesson 4: bringing investors together can be regulated in its own right

If you bring minority investors into a vehicle, you may need FCA permission to do it.

In most ETA deals, investors don’t buy the trading business. They invest in a newco, which then buys the target. Bringing investors into that newco can be arranging deals in investments (Article 25 of the Regulated Activities Order), which needs FCA permission. There’s an exclusion where a single buyer, or a group of connected individuals, acquires control of a company (Article 70 of the Regulated Activities Order), which is why a plain buyout works. A group of minority investors in someone else’s vehicle isn’t that, though whether a searcher raising into their own company is caught is genuinely debated.

If you’re an independent sponsor, read this one twice. You raise deal after deal, you’re paid fees and carry for doing it, and you bring minority investors into a vehicle you control. That looks a lot like arranging by way of business, and it’s a hard argument to win after the event. The same goes for the adviser or angel network organising a syndicate for a searcher on a success fee, and for overseas arrangers reaching UK investors, since the overseas persons exclusions (Article 72 of the Regulated Activities Order) are narrow and technical.

If you’re searching through an accelerator programme, read it twice too. When a programme brings its investor network into your vehicle, deal after deal, it may well be arranging, and the materials it circulates are financial promotions. Without UK authorisation or a principal behind it, both can be unlawful. But the risk doesn’t stop with the programme. You’re the one sending the deck, signing up the investors and holding the cap table that unwinds if it goes wrong, usually without any idea that something was missing. So ask before the first investor call whose permissions the raise sits under and who approved the materials. If nobody can answer, insist on proper regulatory cover, because it’s your name on the deal and you’re entitled to it.

And if you run one of those programmes, none of this means the model is wrong. It means the investor-facing side of it needs a regulated route, which is exactly the gap we built Archimax to fill.

Lesson 5: a holdco or a roll-up can be a fund without anyone calling it one

Raising now for deals someone else picks later can turn your holdco into a fund.

A vehicle that raises capital now for acquisitions to be chosen later, by someone other than the investors, can be an alternative investment fund under the UK AIFM Regulations 2013. A fund needs a manager with the right permissions, and the rules on who it can be promoted to are tighter. There’s an exclusion for genuine holding companies pursuing a business strategy through their subsidiaries, but it turns on the facts.

If you’re raising for a buy-and-build or roll-up with targets still to be identified, this is your lesson, and a plan built around acquiring, combining and selling can count against you. Traditional search funds raising search capital before a target exists should at least ask the question, since practitioners take different views on it.

What happens if you ignore all five

The raise can unwind years later, and individuals can be pursued personally.

Communicating a financial promotion without approval or a valid exemption is a criminal offence (section 25 of FSMA). So is carrying on a regulated activity, such as arranging deals in investments, without permission (section 23 of FSMA). Both carry up to two years’ imprisonment and an unlimited fine on indictment. There’s a defence for anyone who took all reasonable precautions and exercised all due diligence, but it’s a hard one to run when the paperwork plainly came after the pitch.

The civil consequences are more likely to bite. An agreement entered into as a result of an unlawful promotion is unenforceable against the investor, who can recover what they paid plus compensation (section 30 of FSMA), and similar rules apply to agreements made through unauthorised arranging (sections 26 to 28 of FSMA). A court can let the agreement stand if it considers that just and equitable, but that’s a discretion exercised after the event.

That’s how the searcher at the start of this piece ends up handing every investor a free option on the outcome. And it isn’t only theory.

In FCA v Ferreira, a private company called Our Price Records raised £3.6 million from more than 250 retail investors through financial promotions that hadn’t been lawfully approved, and the money was lost when the company went into administration. The FCA pursued one of its directors personally for £2.7 million in restitution under section 382 of FSMA, and won in the High Court.

The Court of Appeal cleared her in 2022, but only because the FCA had to prove she knew the promotions were unlawful, and she had relied on others to get them approved. Don’t read that as a way out. She wasn’t the one making the promotions. If you send the deck, you are, and not knowing the rules is no defence to the offence and won’t, on its own, stop investors unwinding the raise.

If you’re an investor

If you invest in ETA deals, the same rules decide what protection you actually have, so three questions are worth asking before you commit. Were you asked to sign an investor statement before you saw the deck? Who is bringing investors together, and are they authorised or acting under a firm that is? Is the vehicle buying one identified business, or raising for acquisitions still to be chosen?

The answers tell you a good deal about how carefully a raise has been put together. In my experience, a searcher who gets this part right tends to take the rest of the process just as seriously.

Why we built Archimax the hard way

All of this is why Archimax exists in the form it does. We could have built a directory and left the rules to searchers and investors, as a lot of the market does. We chose to build the platform around them, with Sturgeon as our principal.

In practice, every financial promotion on the platform is approved by Sturgeon before it goes live. Investors pass identity checks and certify as high net worth, sophisticated or professional, and Sturgeon approves each certification before anything about a deal reaches them. When members of the B.O.R.I.N.G. Investment Club co-invest, each decides deal by deal, and those who invest come in through a dedicated vehicle holding one identified company, with the arranging carried out under Sturgeon’s permissions.

Searchers go through checks too. We verify their identity and address, and the company they raise through and its beneficial owners, and those who pass carry a verified badge on their profile. It tells investors who they’re dealing with, though it’s a check on the person and the entity, not a view on the merits of the deal.

For a searcher, wherever you’re based, sharing your opportunity with us is a different thing from sending a deck to private individuals. Assessing and investing in deals like yours is our business, and we’re an Appointed Representative of Sturgeon Ventures LLP, which is authorised and regulated by the Financial Conduct Authority. Anything private investors then see about your deal on the platform has been through Sturgeon first. Your opportunity reaches certified investors through a regulated route, and where the Club co-invests, you get one shareholder on your cap table and a regulated firm doing the arranging. That’s the risk we built Archimax to take off your hands.

What that looks like depends on who you are. If you’re a self-funded or traditional searcher still looking for a target, you can join while you search and move up once you’ve found the business. If you’re an independent sponsor raising deal after deal, each one goes through the same regulated route. If you’re searching from outside the UK, you can list from wherever you are and reach UK investors properly. And if you run an accelerator programme, the same route is open for the UK side of your searchers’ raises, and I’d welcome the conversation.

For investors, it means every opportunity you see on Archimax reaches you through a regulated route, whether it comes from a self-funded searcher, an independent sponsor or a search fund, with Sturgeon approving what you see before you see it. You can register to browse them at www.archimax.io.

This is general information, not legal advice, and every raise is different. As far as I’m aware, the FCA hasn’t published guidance specific to search funds, so take advice before the first email goes out. If you’re preparing a raise, or weighing one up as an investor, my DMs are always open.

Issued by Archimax Global Solutions Ltd, which is an Appointed Representative of Sturgeon Ventures LLP, which is authorised and regulated by the Financial Conduct Authority. General market commentary, not investment advice, and not related to any specific investment.

Approved by Sturgeon Ventures LLP on 27 October 2026.