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.

Portfolio News

Finexos: introducing their EIS-eligible investment opportunity

In recent months we have been working closely with Finexos, a company transforming the credit scoring process and today I am delighted to be able to publicly launch their EIS-eligible investment opportunity.

Led by an experienced team who have a wealth of financial services experience amongst them, Finexos are solving a problem that is faced my millions - an inability to access credit (or prime rates of credit) due to the existing credit scoring systems providing an inaccurate representation of their financial capability.

The data Finexos showcase in their Investment Memorandum (accessible via the online pitch page here) highlights how 2 billion people globally are excluded from financial services, and in the UK alone 12 million people are trapped in the high-interest revolving credit trap.

Through the use of the Finexos solution, critical issues such as these can begin to be solved. By providing a more accurate insight into someone’s ability to access credit, the country’s poverty premium can be reduced, helping consumers exit the revolving credit trap. Similarly, millions in repayments could be freed up from unnecessarily high interest rates, supporting the need of the cost of living crisis.

With use cases ranging from consumer and SME bank lending through to utilities companies, commercially the Finexos solution is set to deliver successful outcomes for any provider of credit. Versus legacy credit scores, Finexos can help said providers to achieve:

  • 30% reduction in default rate
  • 5x more credit originated
  • 50% Net Promoter Score (NPS) improvement

Founded by Mark Fisher (who sat on the FCA’s Consumer Vulnerability Workgroup), the team’s experience spans a range of financial services areas and projects, including the launch and design of Hong Kong’s first licenced virtual bank.

Finexos’ CEO, Areiel Wolanow, previously served as one of IBM’s key thought leaders in blockchain, machine learning, and financial inclusion. Importantly, Areiel led the development of the credit scoring engine - upon which Finexos is modelled - which when launched to the Kenyan market via the country’s leading mobile payments provider, M-Pesa, achieved two key milestones:

  1. Took 2% of the country’s population out of poverty, as the solution could provide they were creditworthy
  2. Doubled the country’s GDP, as access to credit is the leading contributor to GDP growth

Having a number of Letters of Intent signed and the platform MVP ready to be rolled out with pilot schemes, this £500,000 minimum raise will support the company’s market entry strategy and begin proving the value of their solution.

EIS-eligible, which provides investors with access to a range of tax reliefs to assist with mitigating risk and maximising potential returns - including 30% income tax relief on the value of your investment - you can find full details of the opportunity here.

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.