What are the main risks?
1. There is a possibility of experiencing a complete loss of the invested funds.
- Investing in start-up businesses often means buying shares directly from them. However, it’s important to be aware that many start-ups don’t succeed, and as a result, investors in these shares can end up losing all of their invested money.
- The platform you use for investing might not have checked how well the businesses are expected to do. It’s a good idea to do your own research before making any investment decisions.
2. The return of your money may not happen quickly.
- Even if the business does well, it could still take a few years to get your money back.
- Start-up businesses usually don’t give back money through dividends. So, it’s not something you should count on to get your money back.
3. It’s a good idea not to put all your money into one investment.
- It’s risky to put all your money into one business or investment type. It’s better to spread your money across different investments, so you’re not relying too much on one. A good rule is to avoid investing more than 10% in high-risk options.
4. The value of your investment may decrease.
- If you own shares in a business, your ownership percentage might decrease if the company issues more shares. This could affect the value of your investment, especially as many start-up businesses issue shares in multiple rounds.
- The new shares may have additional rights, like receiving a fixed dividend, which your shares might not have. This could potentially impact your chances of getting a return on your investment.
Investing involves risks, including loss of capital, illiquidity, lack of dividends and dilution, and should be done only as part of a diversified portfolio. Please read the Risk Warnings before investing. Investments should only be made by investors who understand these risks. Tax treatment depends on individual circumstances and is subject to change in future.