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.


What the 2016 budget means for SME businesses

Update: further to the 2017 Autumn Budget, we produced a post looking at the impact on property and homebuilders, tax efficient investing (specifically the EIS), and Angel investors.

Yesterday, chancellor George Osbourne delivered his 2016 Budget. You may have heard about the proposed sugar tax, which had chef Jamie Oliver performing a celebratory dance, live on the BBC news:

But what does the Budget mean for UK entrepreneurs and SME businesses? We've rounded up some articles which look into how small and medium-sized business owners will be affected.

Business rates shakeup to benefit small businesses

In what is fantastic news for new and SME business owners, Osborne announced that around 600,000 small businesses will be taken out of business rates from 2017, saving them £6,000 a year.

According to research carried out by leading accounting and payroll software company Sage, more than a third of the UK's small business owners say that a change in business rates would have the biggest impact in terms of transforming their company.

Read the full story.


Osborne extends entrepreneur's relief

The chancellor confirmed that entrepreneurs’ tax relief will be extended to long term investors in unlisted companies, meaning that entrepreneurs will be able to access a 10% rate of CGT (capital gains tax) on newly-issued shares.

This Budget continues to lower taxes, with new support for small business and entrepreneurs, while also modernising the tax system and taking steps to ensure that taxes are fair and are paid.

- The Budget documents.

Read the full story.

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Budget judged ‘solid’ for small businesses and entrepreneurs

The chancellor's claim that he wanted to help "light the fires of entrepreneurship" saw him deliver a Budget that experts said would provide help to small business owners and entrepreneurs, with the promise of tax rate cuts going down particularly well.

Read the full story.

But what's missing? Is there more that the chancellor could be doing for SME businesses?


Here are 10 things small business owners want from Osborne

There are a number of factors that go into growing a successful SME business. The proposed actions outlined in the 2016 Budget have great potential, but some small business owners would like to see more.

  • Faster broadband

Given the nature of our business, better broadband and improved mobile network access are key areas of us. For businesses in 2016, ultra-fast broadband is a necessity and should no longer be considered a luxury.

- Joe Giordano, founder of ChargeApp

  • A Northern Powerhouse plan “with substance”

My aspirations regarding the upcoming budget would be for the government to offer greater support for new and smaller firms in the North.

There’s currently very little, if anything, which could be directly linked to government policy to support or encourage new businesses in our region. While I expect the chancellor will draw on the Northern Powerhouse, this is unlikely to actually bear much substance since, with the possible exception of Leeds and Sheffield which attract occasional support due to the allegedly forthcoming HS2 link to London, the government does very little to support Yorkshire small and medium enterprises.

- James Turner, managing director of Turner Little

Read the full story.


A “budget that backs business”? Entrepreneurs react to the Budget 2016 gathered responses from a number of UK entrepreneurs and small business owners to find out their thoughts.

  • "Yes" to the extension of Entrepreneurs Relief

It is an exciting time for British high growth small businesses – we have great people, a supportive community, access to funding and plenty of innovative ideas, making this an incredibly fertile place to grow outstanding businesses. With this in mind, UK entrepreneurs will welcome the chancellor recognising this ambition and entrepreneurial appetite, rewarding those who choose to sell their business by […] extending Entrepreneur’s Relief.

- Alex Macpherson, head of Octopus Ventures


  • "No" to the exclusion of small business funding in the budget

I was disappointed to see that the fundamental issue of access to basic banking services was not discussed. This is a severe problem and it is worrying that it wasn’t addressed by Osborne. Whilst it is promising to see that business rates were discussed to help those small and medium enterprises already up and running, the government need to help the UK’s small businesses that are held back from even reaching this stage.

- Rich Wagner, CEO and founder of Advanced Payment Solutions

Read the full story.


Are you a the owner of an SME business? How do you think yesterday's news will affect you? Share your thoughts by leaving us a comment below.

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