Don't invest unless you're prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong.
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Risk Summary

Estimated reading time: 2 min

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

  • You could lose all the money you invest
  • Most investments are shares in start-up businesses or bonds issued by them. Investors in these shares or bonds often lose 100% of the money they invested, as most start-up businesses fail.
  • 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.

You won't get your money back quickly

  • Even if the business you invest in is successful, it will likely take several years to get your money back.
  • 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.
  • Start-up businesses very rarely pay you back through dividends. You should not expect to get your money back this way.
  • Some platforms may give you the opportunity to sell your investment early through a 'secondary market' or 'bulletin board', but there is no guarantee you will find a buyer at the price you are willing to sell.

Don't put all your eggs in one basket

  • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well. A good rule of thumb is not to invest more than 10% of your money in high-risk investments. Learn more here.

The value of your investment can be reduced

  • If your investment is shares, the percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
  • These new shares could have additional rights that your shares don't have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

You are unlikely to be protected if something goes wrong

  • Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker.
  • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated platform, FOS may be able to consider it. Learn more about FOS protection here.

If you are interested in learning more about how to protect yourself, visit the FCA's website here.

For further information about investment-based crowdfunding, visit the crowdfunding section of the FCA's website here.
growth capital ventures
Insights
Jenna Taylor
· 1 min read
· Updated on

High net worth individuals to invest more in 2016

A new global poll, conducted by one the world's largest independent financial advisory organisations, has found that three quarters of high-net-worth individuals plan to increase contributions to their investment portfolios in the first half of 2016.

When the deVere Group asked, “Do you intend to invest more in the first six months of 2016?”, 76% of clients contacted said "Yes", 14% responded "No", and 10% did not yet know.

767 people with investable assets of £1m or more from countries including the UK, the U.S., Australia, the United Arab Emirates, Qatar, Hong Kong, South Africa, and Switzerland were surveyed in January 2016.

deVere Group offer specialist global financial solutions to international, local madd affluent, and high net worth clients and has a network of more than 70 offices, 80,000 clients, and $10bn under advisement, across the world.

Founder and chief executive of deVere Group, Nigel Green said: “The results of this poll clearly show high-net-worth individuals now have a strong appetite to use the cash that they have held in reserve to top up and diversify their investment portfolios.

“The survey overwhelmingly demonstrates that they are aware of the opportunities to buy high quality equities at the prices they want to pay. They are seeing more favourable choices to boost their portfolios for the longer-term. 

“It is a sound investment strategy to put new cash to use in the market whilst prices are relatively low. Capitalising like this on the attractive long-term performance of stock markets is a time-honoured way that investors can successfully build wealth.”

He added: “No-one can predict exactly what the markets will do in the immediate future and it’s too early to say if this is or isn’t the bottom of the market. But our poll suggests that high-net-worth investors believe that it is close to the bottom and that there are major buying opportunities.”

The deVere CEO concluded: “It would appear that many high-net-worth individuals kept their powder dry during 2015, as the markets rose then fell and as we braced ourselves for the first Fed rate hike in almost a decade. But any qualms they might have had last year are now countered by more attractive prices."

“They are moving away from a preservation approach by diversifying their investment portfolios. As shown by decades of financial market data, this is the correct approach to risk management.”

 
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Growth Capital Ventures (GCV) is backed by funds managed by Maven Capital Partners, one of the UK’s leading private equity and alternative asset managers.