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.

Company News

The UKBAA Investment Summit: supporting regional growth and investment

The UK Business Angels Association (UKBAA) - a national trade association for angel and early-stage investment - held their annual National Investment Summit in London last month.

Supported by Nesta Impact Investments, the summit followed on immediately from the Budget and the UK's important new strategic announcements, which offered a timely opportunity for the angel investment community to both hear more detail and reflect and respond to these new developments.

Investing and supporting high growth entrepreneurs

I was honoured to be invited to sit on the ‘Creating a Level Playing Field For Backing High Growth Entrepreneurs Across the UK’s Regions’ panel at the Summit, alongside some fantastic peers from the Development Bank of Wales, NorthInvest and the Scottish Investment Bank.

This was a brilliant opportunity to discuss the great work happening (and which is planned to happen) in the region, tying particularly well into the Budget's angel investment announcement.

Leading players from the investment industry took to the event to look at the challenges and opportunities for building an effective supply of capital, from startup through to long term growth for the UK’s innovative businesses.

With the Government’s policy for a new Patient Capital framework now emerging and the Chancellor’s fiscal plans put on the table, the UKBAA Summit offered a timely opportunity to review the impact of these developments on the investment landscape, as well as on the potential for establishing a sustainable growth finance ecosystem for the UK’s innovators and market disruptors.

Budget 2017 - it's time to build regional angel networks

The key takeaway points highlighted that the fundamentals pretty much are the same, however, there was positive outlook, with key measures being discussed by Keith Morgan from the British Business Bank, telling us more about the £2.5 billion of new funds announced by the Chancellor for BBB to deploy to support further growth capital and address regional disparities. This programme will supplement existing programmes and support access to finance outside of the capital, including regional venture capital and private equity funds.

In addition, Dr Ruth McKernan from Innovate UK was able to deliver hot off the press news of the announcements in the industrial strategy, including a new loan scheme for innovating businesses to support commercialisation.

Reviews around Patient Capital were also a key part of discussions, which brought to light that these outcomes should assist in the angel networks being able to create places for growth and enable us to extend networks across the UK. This will directly help entrepreneurs access funds and inevitably enable angels to support these companies and help active entrepreneurs grow and prosper.

Each region has a very different voice, and we must pull together to create a strong message. Building specific angel hubs will allow entrepreneurs throughout the UK to access advice and support.

For example, the UKBAA themselves have recently launched an angel hub in Bristol where angels and entrepreneurs can come together and share best practice, build skills and capabilities, and continue to promote good practice.

Introducing G.Ventures Investor Club

The UKBAA event was joined by over 30 guest speakers and panelists, offering the opportunity for lively debates on challenges and opportunities for building a finance ecosystem to support high growth here in the UK, whilst looking at some of the disconnects, including the opportunities to leverage more angel investment outside of London and the Golden Triangle.

This was the first UKBAAA Summit I've attended and it was incredibly pleasing to see some of the important projects and innovative businesses being supported by UK wide angel investors.

What's more, seeing how the angel community is growing, and most importantly seeing that some of the best companies across the UK have been supported by angel networks, was brilliant.

This completely resonates with our recent launch of the G.Ventures Investor Club, which is bringing together a group of sophisticated investors in the Tees Valley to back high growth local businesses and projects. As such, we particularly welcomed the new proposal to support the development of further capacity for angel investing across regions outside of London, which will be supported by the British Business Bank, and understand that GCV is doing our part to align the plans of the UKBAA.

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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.