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.
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.

Industry Insights

Growth of the peer-to-peer asset class



Interest rates really do matter to people. They directly affect the affordability of their mortgage and the return offered on their savings. Most people have – to a greater or lesser degree – an interest in both financial products.

The chart below intentionally has no titles, but the eagle-eyed amongst us will be able to have a decent guess at what it represents.



However, persistently low interest rates present as many policy challenges as solutions. From an individual perspective, savers are facing difficulties maintaining the real terms value of their asset. Earlier in 2017, Royal London highlighted the scale of this in its powerful policy paper The Curse of Long-Term Cash. Royal London contrasts the value of a £1,000 investment made ten years ago. In a Cash ISA, this would now be worth less than £900; in a multi-asset fund, this would now be worth an estimated £1,500. Royal London concludes that the UK Government should do more to discourage people from using Cash ISAs as long-term investment vehicles.

Moving away from savings

Perhaps inevitably, limited returns on cash balances are driving people away from saving. Many have found a natural home in the world of peer-to-peer (P2P) lending. Central to the P2P proposition has been an ability to shift the lending asset class away from institutions and towards individuals. Where as banks previously dominated lending to individuals and businesses, P2P platforms enabled individuals to lend directly. This disruptive technology has realised operational efficiencies such that it can offer superior rates (to both borrowers and lenders) whilst maintaining sufficient rigour that it commands the confidence of both groups.

Almost £1.5bn was lent to UK businesses through P2P platforms in 2015 alongside over £0.9bn to UK consumers. This represented average annual growth rates of 194% (lending to businesses) and 78% (lending to consumers) between 2013-2015, respectively.




“Peer-to-peer lending is not saving – it’s somewhere in between saving and investing." Martin Lewis captures the essence of P2P lending. It suits people who have capital on which they are seeking a return, but who find the prospect of equity investment too risky. The perceived risks could be around loss of value (although lending carries the risk of default) or around loss of liquidity. Lending has a fixed point at which the loan is scheduled to have been repaid. Although some equity investments are more tradable than others, it might not be possible to immediately liquidise even the most tradable equity investment.

Future outlook

Leading P2P lending platforms have been around for over ten years, but continue to evolve. Most recently, established providers have sought and secured banking licences that will enable them to offer additional financial products, such as Innovative Finance ISAs. This reinforces the supposition that P2P platforms are moving into the mainstream and seeking to emulate the model that they initially disrupted. This accreditation reinforces the legitimacy of P2P lending platforms and should go some way to addressing concerns expressed in 2016 by a former regulator.

The characteristics that made P2P platforms an appealing proposition for investors are likely to endure for as long as low interest rates offer savers such limited returns. Factors such as increased technological capability and trust in innovative financial institutions have also assisted the development of the P2P sector. Reflecting on the notion that P2P lending sits between saving and investing, it seems entirely logical that a P2P lending platform could represent a perfect complement to an equity co-investment platform.

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.