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
Company News
Jenna Taylor
· 2 min read
· Updated on

Growth Capital Ventures now has direct authorisation from FCA

GrowthFunders, has reached a huge milestone

At the very beginning of our GrowthFunders journey, we set ourselves a list of goals. This list included the soft-launch of the platform, the official launch, our first successful close out of a listed pitch, the first syndicated investment between online angels and an institutional investor, making our team bigger, and successfully closing out our own funding round for Growth Capital Ventures - all of which we’ve proudly achieved over the last year and a half.

One of the biggest goals we set ourselves was to become directly authorised by the UK Financial Conduct Authority (FCA).

The FCA is the body which regulates all financial activity in the UK, which includes the manner in which shares in companies are sold to the public (the crowd, online angels, angel networks, institutional investors).

We’re excited to bring you the news that we have passed this exciting milestone in the GrowthFunders journey...

 

What Does This Mean

This is a fantastic achievement for us, and comes after an 18 month application process and waiting period. Although that sounds like quite a while, it took other platforms over two years to gain direct authorisation.

Since our launch in March 2014, we have been operating as appointed representatives of FCA-authorised investment manager, Linear Investments, which meant that we were able to operate within the permissions that they held.

By its very nature, equity crowdfunding invites the “crowd” to get involved. However, an early stage investment strategy can bring risk as well as the reward of financial returns, which is something it is imperative people understand, prior to investing.

Equity crowdfunding is made up of trust, honesty, transparency, and high quality opportunities. If any of those qualities are missing, then the practise of equity crowdfunding faces challenges.

Here at Growth Capital Ventures, we pride ourselves on having these qualities. However, not everyone follows the rules to a T, which is why a regulatory body, such as the FCA, is in place.

One of the main purposes of financial regulation in any country is to control the manner in which shares of companies are sold to the public.

Join GrowthFunders and become a member

Participation in the capital markets by the masses is a good thing: it allows capital to be allocated to its most profitable uses, thereby creating growth and jobs for society and inflation-beating (and occasionally lifestyle-changing) returns for investors.

With equity crowdfunding platforms, financial regulations are there to control the manner in which shares in startup, early stage, and more established business, are sold to the public.

As well as this, they serve to strike a balance between allowing the alternative finance marketplace to function freely whilst ensuring that everyone plays by an agreed set of rules.

These rules are in place to protect both entrepreneurs and investors, as well as helping to maintain the integrity of the sector as a whole.

Equity crowdfunding, and the alternative finance sector as a whole, has had (and will continue to have) an extremely positive impact on growth of all kinds in the UK. For example, the economy reported growth, as well as the formation of a record number of startups, which were able raise the capital they needed in order to launch and begin their potentially-high growth journey.

Next steps

Our development team have been working hard on a new-look website, which we’ll be unveiling very shortly. We can’t wait for you to see it and let us know what you think of the changes.

There’s also another change we’ll be making due to our direct authorisation which concerns the signup process.

Soon, it’ll be even simpler than ever to become a GrowthFunders member because we now have retail permissions.

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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.