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.
GCV
Insights
Industry Insights
Dan Smith
· 3 min read
· Updated on

Investing returns vs music royalties: a profile of U2's Bono and the Edge

Edit [19/01/18]: I've updated this piece further to the recent news that Bono has made his first investment into fintech

At the helm of one of the world's most prominent bands for over 40 years, Bono and the Edge are known around the globe as U2's frontman and lead guitarist respectively.

Selling over 170 million albums since the launch of their - 1980's 'Boy' - as a band they've won numerous awards and accolades over the years.

As individuals, they've each been recognised for their human rights campaigning and continuous philanthropic efforts.

Undoubtedly household names whether you're an avid fan of U2 or not, it wasn't surprising when in 2013, The Sunday Times reported that as a band, they'd amassed a wealth of over €632 million.

And whilst we cannot escape the fact a considerable portion of their wealth has come from their musical endeavours (their 1987 album 'The Joshua Tree' alone has shipped over 25 million units worldwide to date), one of the most interesting facts about Bono and The Edge isn't related to them as musicians.

It's reported they've earned more from their investments than they have throughout their entire music career.

Investments that make a difference

Their must recent public investment was in late 2016, when it was announced the duo had invested into Irish food tech startup Nuritas.

The company, which utilises artificial intelligence and DNA analysis to discover food molecules that can be used to develop supplements and drugs, the company had already received €3 million in funding to trial and market a breakthrough food ingredient that could be used to prevent diabetes.

With plans for clinical trials to further their brilliant achievements to date, the investment was reported to help Nuritas triple its Irish workforce whilst simultaneously driving expansion across the Atlantic.

Although the amount invested by Bono and the Edge was undisclosed, given the duo's penchant for investing, and focus on a smaller portfolio to distribute their investment to, it wouldn't be surprising if the sum was a particularly considerable one.

Making high profile investments

The duo were generally seen to start their investment career in the early 2000s after Bono co-founded the private equity firm Endeavour Partners in 2004.

Over the years, they've invested in a number of high profile companies and deals, including Yelp and Dropbox.

With the former, the firm made a $100m investment in consumer review website Yelp back in 2010, and with the latter, they formed part of online storage Dropbox's $250 million second investment round in 2012.

Yet whilst investments into Yelp and Dropbox are undoubtedly high profile and worthwhile, it's their investment into Facebook that has seen them make the largest return to date as individuals.

With Elevator Partners starting with a fund of $1.9 billion at the point of launch, the firm invested $270 million of this directly into Facebook over the course of 2009 and 2010.

Just five years later in 2015 it was reported the investment had subsequently brought in stock to the value of $1.4 billion, for which Bono himself is said to have received in excess of $40 million.

Impact investors

Having a clear focus on tech-based investments, not surprisingly given their charitable work they appear driven to be very much impact-style investors.

As with most investors, they of course want to make a financial return, but they also want to invest in companies who will make a genuine difference, whether that's to individuals, the environment or the world as a whole.

Elaborating on this at the point of investing in Nuritas, the Edge said "we want to bring forward and support innovative, world-changing ideas".

What's more, as of January 2018, through Bono's investment startup The Rise Fund, he has branched out into fintech by investing into the micro investing app Acorns and Varo Money.

With The Rise Fund bringing together in the region of $2 billion worth of investment for sustainable projects that have a direct, positive societal impact (in line with the United Nations’ Sustainable Development Goals), John Flyn of TPG Growth (the private equity investment platform backing The Rise Fund) said of Acorns: "Acorns is exactly the type of company we’re looking to support. They have achieved extraordinary business success characterized by rapid growth while also helping to make it easy, efficient and transparent for Americans to generate savings and build their futures.”

This post is part of our UK celebrity investors series. You can find our introductory post to the series here.

 
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Delivering Impact.

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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.