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.
Investor doing a deal by deal investment
Insights
Matthew Robineau
· 3 min read
· Updated on

Why Investors May Choose Deal-by-Deal Investments Over Traditional Funds

Why Investors May Choose Deal-by-Deal Investments Over Traditional Funds
5:46

When it comes to investing in opportunities within the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) wrappers, many are familiar with the concept of a fund—a pool of capital invested across a wide range of start-ups.

Funds are designed to spread risk and offer a hands-off way to invest.

But what if there was a model that allowed you to take a more active role in curating your portfolio, target higher returns, as well as having the freedom to build up your own portfolio of investments over time? 

That’s where deal-by-deal investments come into play.

 

The Flexibility and Control of Deal-by-Deal Investing

One of the most compelling reasons many investors prefer deal-by-deal investing is the level of flexibility and control it offers.

Unlike traditional funds, which pool investor capital and invest in a broad array of companies, deal-by-deal opportunities allow you to hand-pick the investments you want to make, based on your preferences, expertise, or knowledge of particular sectors.

This level of control enables you to build a portfolio that aligns closely with your individual investment strategy, whether you're looking to target specific industries or diversify across different opportunities.

 

Higher Returns Than Traditional Funds

While funds generally offer diversification across a broad set of investments, they also tend to target lower returns, typically in the 1-3x range for early-stage VC/SEIS/EIS investments. These funds are designed to spread risk across many companies, and while that approach can be appealing to some, the returns can often be too modest for those who find the traditionally higher risk, higher return nature of SEIS and EIS investing appealing

In contrast, deal-by-deal investments have the potential for much higher returns. Targeting 10x returns is not unrealistic, and seeing returns in excess of this is not unusual - our own portfolio at GCV has experienced investor returns of up to 75x.

While returns naturally vary, this model allows you to target specific opportunities that can generate higher returns than a traditional fund might typically deliver.

 

The Role of Diversification

Now diversification is a cornerstone of any well-balanced investment portfolio, and while a fund structure may offer some diversification, it’s not always enough for some.

Many funds focus on spreading risk across a wide range of investments, but they may lack the depth of control and scrutiny that a deal-by-deal approach can provide.

An experienced advisor would likely recommend not putting all your money into a single fund, even if it’s a top-performing one. Instead, they’d likely suggest combining fund investments with others to spread risk and enhance potential returns - and that can easily include single-deal investments.

As deal-by-deal investing allows you to actively curate your portfolio by selecting investments that align with your goals, you are able to strike a balance between diversification and the potential for higher returns, offering you more control over your risk profile.

 

Building Your Own Portfolio

Many investors who favour deal-by-deal investments choose to build their portfolios over time, selecting specific opportunities as they go live. This approach offers significant flexibility, allowing you to gradually increase diversification while still maintaining the freedom to double down on investments you feel strongly about or omit those you don’t.

Following the progress of your portfolio in real-time, making adjustments along the way as new opportunities arise, this level of flexibility is not typically available through traditional funds, where your capital is often committed upfront and the fund manager has the final say on investment decisions.

 

GCV Invest: A Higher Level of Due Diligence and Control

Another advantage of the deal-by-deal model is the focused approach we take in evaluating each opportunity. Unlike traditional funds, which may manage portfolios with hundreds of companies, GCV Invest carefully selects a smaller number of high-potential investments. Our team assesses over 750 opportunities annually, with only a select few being presented to our investors.

A significant factor in GCV’s ability to achieve strong returns is the presence of GCV Labs, our dedicated venture builder division.

Through GCV Labs, we work closely with a number of portfolio companies, offering hands-on support across various areas, including software development, marketing strategies, and overall business scalability.

This close partnership not only reduces risk but also significantly enhances the growth potential of the companies we invest in, leading to improved chances of successful exits. It’s this level of engagement and support that inspires many of us on the GCV team, myself included, to personally invest in these opportunities.

With GCV Invest, our exclusive network for experienced investors, you gain access to SEIS and EIS-eligible opportunities that aim to achieve solid returns, while also benefiting from the additional support and strategic guidance we provide to our portfolio companies.

 

Final Note

By offering greater control, flexibility, and a more hands-on approach to investing, deal-by-deal opportunities provide a unique way for investors to build and manage their portfolios. Whether you’re seeking higher returns, better diversification, or more control over your investments, deal-by-deal investing can help you meet your goals while managing risk more effectively.

GCV Invest

GCV Invest Brochure: build your wealth with impact

For investors looking to build their wealth whilst contributing to long-term positive impact, this brochure offers an insight into the types of growth-focused investments we offer at GCV Invest and the role they could play in your portfolio.
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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.