Risk Warning

What are the key risks?

1. You could lose all the money you invest.
2. Most investments are shares in start-up businesses or bonds issued by them. Investment in these shares or bonds can lose 100% of the money they invested, as most start-up businesses fail.
3. Checks on the businesses you are investing in, such as how well they are expected to perform, may not have been carried out by the platform you are investing through. You should do your own research before investing.
4. You cannot get your money back quickly.
5. Even if the business you invest in is successful, it will likely take several years to get your money back.
6. The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
7. Start-up businesses very rarely pay you back through dividends. You should not expect to get your money back this way.
8. Some businesses may work with companies to give you an opportunity to sell your investment early through a secondary sale, but there is no guarantee you will be able to benefit in this way or be able to sell.
9. Diversifying your investments.
10. Putting all your money into a single business or type of investment (for example, in tech) Spreading your money across different investments makes you less dependent on any one to succeed. A good rule of thumb is not to invest more than 10% of your money in high-risk investments.
11. The value of shares and bonds can be reduced.
12. Businesses may sell more shares, reducing the shares you own will decrease if the business issues more shares. This could mean that the value of your shares is reduced. If the business is unsuccessful, you could lose 100% of your investment in unlisted shares.
13. You are unlikely to be protected if something goes wrong.
14. Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed firms, does not cover most investment platforms. Try the FSCS’s Investment Protection Checker here.
15. Information from the Financial Ombudsman Service (FOS) does not cover your investment performance. If you have a complaint against an FCA-regulated platform, you can ask them to review. Learn more about FOS protection here.

If you are interested in learning more about how to protect yourself, visit the FCA website here. For further information about investment-based crowdfunding, visit the FCA’s website here.