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 Business Finance Market
Portfolio News
Dan Smith
· 2 min read
· Updated on

GCV facilitates funding for new fintech set to boost UK SMEs'

Growth Capital Ventures has led a £1.3 million super seed investment round into Business Finance Market (BFM), a fintech platform set to boost access to finance for the country’s 5.9 million SMEs.

The funds will be used to drive the development of BFM’s technology forward and further enhance the team. This round, which saw pledges exceed the initial target of £1 million, is further to an oversubscribed seed round of £225,000 in June 2021.

This is the latest EIS-eligible investment opportunity led by Growth Capital Ventures, an FCA
authorised investment firm specialising in impact driven co-investment opportunities across
alternative asset classes.

Experienced banker and entrepreneur Craig Iley – who has co-founded two challenger banks in the UK – has established BFM to streamline the lending process through technology innovation and a reengineered customer journey to match lenders and SMEs together to help them secure the right finance for their business. The expert team assembled includes banking specialists, commercial brokers and SME business experts

With almost 90% of SME loan applications that do not complete due to poor processes, the lending market has become slow, fragmented and in need of innovation. This new technology will allow SMEs to access quicker finance decisions while providing lenders and intermediaries with a fintech platform that will help to manage the end-to-end application process, improve information and increase deal flow in order to deliver faster credit decisions.

Craig Peterson, co-founder and Chief Operating Officer of Growth Capital Ventures, said:

Banking for the SME lending market is notoriously complex, outdated and unsupportive of the needs of the organisations that account for three fifths of employment and 50% of revenue in the private sector. 

Once developed, this platform will make it easier for SMEs and their trusted advisors to access finance quicker and easier. It will allow businesses to deal with multiple providers at the click of a button. This is an attractive proposition not just for SMEs but banks, commercial brokers, UK plc and the Bank of England.

In its response to the Van Steenis report, the Bank of England has publicly stated it is keen to
champion technology platforms to help SMEs make better use of their data to access services and to apply for and obtain credit using a digital portable credit file.

Craig Iley explained:

SMEs are the backbone of the UK economy but are gradually being excluded from mainstream banking. In 1988 around 40% of all bank lending went to SMEs. Today that is closer to 4% with an estimated £22bn funding gap to around six million UK SMEs.

Expectations among SMEs are increasing with a demand for more focused lending products, faster credit decisions, improved funding chances and flexible options regarding collateral requirements. We are reengineering the entire journey, to reduce friction for all stakeholder groups and ensure better customer outcomes along with benefits to investors.

Our focus on advanced databases and machine-learning algorithms and end-to-end customer journeys differ from the slower, less accurate, labour-intensive application processes and legacy systems in use today. The platform will have a real competitive advantage leading to the potential of higher profit margins, continued growth opportunities and the agility to respond more quickly and effectively than its competitors.

 

 
Driving Growth.
Creating Value.
Delivering Impact.

Backed by

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.