Risk Warning and Disclaimer
This investment platform is operated by Capital Plus Partners Ltd (“Capital Plus Partners”) which is authorised and regulated by the Financial Conduct Authority (“FCA”) under Firm Reference Number: 189495).
Investment in new business carries high risks as well as the possibility of high rewards. It is highly speculative and potential investors should be aware that (a) they could lose the total value of their investment and (b) no established market exists for the trading of shares in private companies, making it difficult to sell your shares.
Potential investors are strongly advised to take appropriate professional advice before making any investment decisions.
Capital Plus Partners cannot advise on the merits or risks of investments.
Investing equity in early-stage businesses which are not quoted on any stock exchange carries particular risks. Please see below some information relating to these risks.
- Loss of Capital
Investors should only invest an amount that they are willing to lose and should balance this with safer, more liquid investments, to spread risk. Many early-stage businesses fail or do not scale as planned. Therefore, investing in these businesses may involve significant risk.
- Dependence on the directors
The success of many investee companies will depend in part upon the ability of their directors to develop and maintain a strategy that achieves the company’s investment objectives. Thus, the departure of a director may result in the deterioration of an investee company’s performance.
- Lack of operating history
Some companies are relatively early stage and, as such, have no substantive operating history upon which prospective investors can evaluate likely performance.
- Forecasts and Past performance
Neither past performance nor forecasts should not be regarded as a reliable indicator of future performance.
You can reduce your risk by spreading your investment across multiple deals, rather than investing all available funds into one deal.
Equity investments lack liquidity, meaning that they cannot be sold easily and they are unlikely to be listed on a secondary trading market, such as AIM, Plus or the London Stock Exchange.
- Rarity of Dividends
Dividends are payments made by a business to its shareholders from the company’s profits. Many early-stage companies rarely pay dividends to their investors. This means that you are unlikely to see a return on your investment unless you sell your shares. Even for a successful business, this is unlikely to occur for a number of years from the time you make your investment.
Equity investment in shares may be subject to dilution, if the investee company issues more shares. If under the investor agreement, investors are given “pre-emption rights”, in the event of a further fundraising, they are entitled to buy a proportionate number of shares, enabling them to maintain their percentage shareholding in the company. If investors do not exercise their pre-emption rights, their shareholding will be diluted, affecting the voting rights, dividends and value of their shares.