Investing in startups involves risks, including loss of capital, illiquidity, lack of dividends and dilution, it should be done only as part of a diversified portfolio. These investments are targeted solely at investors who are sufficiently sophisticated to understand these risks and make their own investment decisions.
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Risk Warning

Risk Warning - You should not invest in the equity of a business on this site unless you are prepared to sustain a total loss of the money you have invested.

Loss of investment

The majority of start-up businesses fail and therefore investing in such a venture will involve significant risk.  It is possible that you may lose all of your investment. You should only invest the amount that you are prepared to lose.

Lack of Dividends

The payments made by a business to its shareholders from the company’s profits may be scarce. It is rare for start-ups to pay these, as they tend to reinvest any profits into further development and growth. The company is not allowed to pay out more in dividends than its available profits from current and previous financial years.  This means that you are unlikely to see a return on your investment until you are able to sell your shares.

Lack of Liquidity

Selling your shares may be difficult, known as illiquidity. These small early stage businesses are unlikely to be listed on a secondary trading market, in the near future. We do however in the articles ensure that you have the same class of shares as the entrepreneurs, voting shares are attractive to potential buyers in the event of a sale and you have drag along and tag along rights. These are rights contained in the Entrepreneurs articles of association, which enable you in the event that a majority shareholder wishes to sell their shares to force that majority to obtain an offer on your shares also. 

Dilution

Your investment may be subject to dilution in the future. There is no guarantee that the first amount of money is sufficient for all the companies needs. The project may take longer than expected or development opportunities may arise that require further investment. This may be achieved by the company issuing more shares.  The resulting dilution affects existing shareholders who do not buy their proportion of the new shares being issued.   You can avoid dilution, but this requires investing more money, which you may not wish to do.  As a result an existing shareholder's proportionate shareholding of the company drops which may reduce voting power, and the share in any future value.