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.
Insights
Investing Capital
Jenna Taylor
· 3 min read
· Updated on

Tips for hiring the right people for your startup

Hiring the right people to work for your startup can be a tricky process for a number of reasons, especially as you have limited resources, specifically finances and time.

You need to make sure you find the right people for the job as quickly as possible, or “smart hire”.

When your team is very small, for example you have five employees, each person represents 20% of your start up’s culture and performance. Every person counts, which is why it’s imperative you make the right decisions.

Initially, your key hires need to be enough to help you produce your Minimum Viable Product. You need to hire people whose strengths can help build a great team and whose skills compliment your own, and those of your co-founders.

For example, if you are strong on the tech side, you need to find someone with business development or sales and marketing skills and vice-versa.

Let's take a look at some key hires...

Founder(s)

Every startup was founded by someone – perhaps even a couple of “someones”. If you alone are the founder of your business, it’s likely that you’re dedicated to making it work, grow, and be successful. At least in the very beginning, it’s done to you to get the startup started up.

Hopefully, the same can be said when it comes to co-founders, and you both (or all) feel that same dedication and drive to build something great. For the purposes of this post, I’ll write as if you have co-founders.

One of the most important things to do at this stage, before the business goes any further, is to evaluate the qualities you and your co-founders have.

Once you’ve decided that you are the right people to head/lead the business and unlock its high growth potential, it’s time to divide the responsibilities between you, based on your skill set.

As the core element of your startup, it is up to you to define the culture of your company and begin to build the structure which will take you forward.

Critical hires

The aim of the first hires you will need to make are dependent on the skills you and your co-founders have.

It’s necessary to fill in the gaps. For example, if you are strongly skilled in the tech side of things, you’ll need to hire people who are talented at selling the product you’re building, who market your business correctly and to the right people, and those who are able to manage the community your business is building.

Obviously, the hires you can make at this early stage are often dictated by the finances available. However, this doesn’t mean you shouldn’t aim to hire the best people for the job. Your start up deserves the best start.

The “Dream Team”

Don Fornes, CEO of Software Advice the key hires a little differently; instead of looking for skill sets to fill job roles (a developer, a communities manager, and digital marketing executive), he suggests focusing on personality types. In his article “These 4 Personalities Make Up Your Startup 'Dream Team'”, Fornes suggested that killer teams are made up of a mixture of these personalities:

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The Matrix Thinker

A creative problem solver with big ideas. The type of person who can “think outside the box” and is able to build revolutionary products and processes by connecting seemingly-unrelated concepts.

The Savant

Someone who is extremely talented in one area (for example Marketing) and can execute related campaigns and strategies with few problems. Usually they are intelligent and are often, skilled writers, artists, and engineers.

Their prolific nature means that they could most likely become your best creative/marketing content producers.

The Champ

A super-confident individual who believes in your product, wholeheartedly. The type of person who is great at communicating and able to read the needs and wants of potential customers correctly.

Champs are usually best-suited to roles in sales, but can also be successful in management and executive-level positions.

The Giver

This person is usually ideal in a customer support role as they always put the needs of the customer, the company, and often their co-workers ahead of their own.

As team players, they will usually give their all to the business, working longer than their contracted hours.

Advisors

Although perhaps not critical in the same way as “active” employees (people in your office), advisors are invaluable to your businesses.

Some of the types of advisors your business would benefit from are: someone who is well connected and comfortable making introductions between you and potential strategic partners; someone who will allow their name to be associated with your business, whilst not necessarily being directly involved with the everyday running of the start up; and someone who knows your sector inside and out.

Whilst it’s not necessary to have advisors is in place from the beginning, it is something you need to be putting serious thought into as you search for the right candidates to approach.

Having the right advisors join your team can open up a lot of doors for you as you progress along your growth journey.

As your business grows, so too will your team. When your team is small, it's relatively easy to see how engaged your employees are. However, this can become challenging as your team expands.

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