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.
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Weekly Briefing
Jo Bentham
· 3 min read
· Updated on

Weekly Briefing: IMF Upgrades UK Growth Forecast, UK Retains Top Position For Financial Services Investment In Europe & Inflation Falls Close To 2%

In this week’s briefing, we discuss the International Monetary Fund’s (IMF) upgraded growth forecast for the UK, the news that the UK has retained the top spot for financial services Foreign Direct Investment (FDI) in Europe and more.

 

UK Economy

UK Economy Set For Soft Landing As IMF Upgrades Growth Forecast

  • The IMF has stated the UK economy is set for a “soft landing” as it upgrades its growth forecast following faster-than-expected growth in Q1 2024.

  • In the upgraded forecast, the IMF says GDP is expected to grow by 0.7% in 2024 after 0.6% growth over the first quarter.

  • This is up from the IMF’s previous 2024 growth prediction of 0.5%.

  • The IMF’s 2025 growth forecast has stayed the same at 1.5%, as real incomes are supported by slowing inflation and easing financial conditions.

  • In response to the IMF’s report, Chancellor Jeremy Hunt said: “[The report] clearly shows that independent international economists agree that the UK economy has turned a corner and is on course for a soft landing. The IMF have upgraded our growth for this year and forecast we will grow faster than any other large European country over the next six years – so it’s time to shake off some of the unjustified pessimism about our prospects.

 

Inflation Falls Less-Than-Expected To 2.3%

  • The Office for National Statistics (ONS) has reported that UK inflation fell from 3.2% to 2.3% in April, edging closer to the Bank of England’s (BoE) target of 2%.

  • Though this puts inflation at its lowest level since July 2021, the fall is smaller than expected, with City analysts having forecasted a fall to 2.1%.

  • In response to the less-than-expected fall, markets have scaled back predictions of a BoE rate cut as early as June or August.

  • April’s Consumer Price Index (CPI) fall was driven by easing energy and food costs, with the ONS stating that it was prevented from falling further by rising petrol and diesel prices.

  • Prime Minister Rishi Sunak said the inflation figure marks “a major moment for the economy, with inflation back to normal.”

  • Paula Bejarno Carbo, Economist at the National Institute of Economic and Social Research, stated that core inflation (which strips out food and energy costs) remains higher than the historical average at 3.9%, and this would likely need to fall before the Monetary Policy Committee (MPC) would be comfortable cutting interest rates.

  • Carbo said: “Paired with last week’s strong wage growth data, we believe that elevated serviced inflation will remain an upwards risk to inflationary pressures in the second half of this year. As a result, the MPC may exert caution at its upcoming meeting and hold interest rates, despite [the] encouraging fall in the headline rate.”


Annual CPI And Core Inflation Rate, %

Source: ONS via Guardian 

 

Global Economy

World Economic Forum Founder To Step Back From Executive Role

  • After more than 50 years at the helm, World Economic Forum (WEF) Founder Klaus Schwab is to move away from the day-to-day management of the organisation.

  • The move is part of a multi-year strategy to change the management structure of the organisation the Forum has announced, with governance shifting to a President (currently Børge Brende) and managing board.

  • Schwab will transition into the role of Chairman of the board of trustees, and the Forum is yet to reveal who will succeed him to become face of their annual meeting in Davos, Switzerland.

  • The WEF’s annual Davos gathering has become an important event over the years, as it aims to bring world leaders and business heads together to address important issues.

  • The Forum has confirmed that the leadership change-over will be completed before the next Davos meeting in January 2025.

 

Investing

UK Retains Top Position For Financial Services Investment In Europe

  • The UK has retained its position as the top destination for financial services FDI in Europe according to the latest EY Attractiveness Survey for Financial Services.

  • The survey reports that FDI in Europe’s financial services sector rose by 13% to 329 projects in 2023.

  • The UK secured the top spot in Europe with 108 projects, a 42% jump from 2022.
    France ranked second place with 39 projects – a 13% decrease on the previous year – whilst Germany ranked third with 38 projects at a 23% increase on 2022.

  • In 2023, the UK’s market share of financial services FDI in Europe grew to 33%, up from 26%, and the UK recorded 85 new projects in the year alone.

    EY’s report found that London remained the leading European city for financial services FDI with its 81 projects in 2023, a significant 76% increase on 2022.

  • Job creation from financial services FDI also increased across Europe in 2023.
    Projects that disclosed headcount numbers created 12,675 jobs, and the UK led with 5,019 jobs created, a 93% increase on 2022.

  • Anna Anthony, EY UK Financial Services Managing Partner, said: “The UK didn’t just maintain its lead as the most attractive European financial services market last year, it extended it significantly. Even through challenging macroeconomic conditions and geopolitical uncertainty, the stability of the UK’s financial services sector has ensured foreign investor confidence remains strong.”

 

A Final Note

With inflation falling close to the BoE’s 2% target and the IMF upgrading the UK’s growth forecast for the year, the past week has shone a positive light on the prospects of the UK economy amid a fluctuative period.

What’s more, the news that the UK has retained the top spot for financial services FDI in Europe has served to highlight the country’s maintained dominance in the sector and attractiveness to foreign investors - a sustained benefit of the UK private sector. 

At GCV, we remain committed to providing the latest insights into the investment and wider economic landscape in order to support investors in making well-informed decisions when choosing where to allocate their capital.

If you would like to find out more about a number of tax-efficient investment strategies available to UK investors, discover our range of downloadable resources here.
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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.