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.

Weekly Briefing

Weekly Briefing: House prices expected to increase 4% YoY, AI threatens UK job market & more state pensioners to pay income tax

In this week’s briefing, we take a look at the increasingly promising outlook for the housing market amidst what is being called a “blip” in prices and how AI could be negatively impacting the UK job market but businesses could harness its power positively.

We’ll also discuss the news that over half a million state pensioners will now be liable to pay income tax for the first time, and that after 20 months of contraction, UK manufacturing has returned to growth.


UK Economy

UK Manufacturing Returns To Growth

  • The S&P Global/CIPS UK Purchasing Managers Index (PMI) found that UK manufacturing returned to growth for the first time in 20 months in March.
  • Rising to a better-than-expected 50.3 from 47.5 the month prior – with any figure above 50 representing growth – both output and new orders had increased, whilst business optimism also hit an 11-month high.
  • Other signs of stabilisation, such as rates of contraction in employment and purchasing activity “slowing sharply”, were also found.
  • Rob Dobson, S&P Director, stated: “The main thrust of the expansion [came from] stronger domestic demand. The upturn in demand also led to improved confidence among manufacturers [...] some 58% of companies expect their output to rise over the coming year.”


House Price "Blip" But Outlook Remains Promising With Prices Expected To Rise 4% YoY

  • According to Nationwide, UK house prices fell 0.2% in March, but commentators have reiterated that the signs remain positive for the housing market’s longer-term outlook.
  • The same data from Nationwide showed a 1.6% annual increase in house prices when compared to March last year. 
  • Robert Gardner, Nationwide’s Chief Economist, stated that the big picture showed that consumer sentiment is improving, adding: “Surveyor’s report a pickup in new buyer enquiries and new instructions to sell in recent months. Moreover, with income growth continuing to outpace house price growth by a healthy margin, housing affordability is improving, albeit gradually.”
  • Bank of England (BoE) figures have also shown that net mortgage approvals for house purchases rose from 56,100 in January to 60,400 in February, a 17-month high. 
  • Describing the month-on-month fall in house prices as a “blip”, Rob Wood, Chief UK Economist at Pantheon Macroeconomics, said: “Forward-looking indicators continue to suggest house prices will keep rising as mortgage rates gradually tick down. We continue to expect house prices to rise 4% year-over-year in 2024.”


AI Threatens The UK Job Market But Businesses Could Harness Its Powers Positively

  • The Institute for Public Policy Research (IPPR) has warned of a “jobs apocalypse” that could see almost eight million jobs be lost to artificial intelligence (AI).
  • In their report, the IPPR placed entry-level, part-time and administrative jobs as the most at risk of being replaced by AI in the worst-case scenario.
  • Examining 22,000 tasks across various job sectors, the IPPR found that 11% of tasks currently performed by workers are at risk.
  • However, this figure could rise to 59% as technologies evolve to handle increasingly complex processes.
  • On the other hand, the report states that in a best-case scenario for full augmentation of the workforce with AI, no jobs would be lost and the size of the economy could be increased by around £92 billion per year.
  • Carsten Jung, Senior Economist at IPPR, said: “Already existing generative AI could lead to big labour market disruption or it could hugely boost economic growth. Either way, it is set to be a gamechanger for millions of us. But technology isn’t destiny and a jobs apocalypse is not inevitable – Government, employers and unions have the opportunity to make crucial design decisions now that ensure we manage this new technology well.”

UK Tax Update

Frozen Income Tax Threshold Means Over Half A Million State Pensioners Will Start Paying Income Tax This Week

  • According to the Institute for Fiscal Studies, around 8.5 million over-65s will be liable to pay tax on their income from 6th April.
  • This is up from around 4.9 million in 2010 and is due to state pensions rising in line with inflation, whilst the income tax threshold has been frozen at £12,570 until 2028.
  • The state pension will rise to £11,502 this week and while this increase has been welcomed, it will result in pensioners with an additional income of over £1,068 per year now having to pay income tax.
  • This has once again raised concerns surrounding the tax threshold freeze, and is just one example of how it will have a significant impact on hundreds of thousands of people’s livelihoods. 
  • As such, it’s more important than ever to be fully aware of the tax-efficient products that are available to you as you look to build your wealth and how they may fit into your financial planning strategy.
  • For investors, this could include the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS), which benefit from up to 30% and 50% income tax relief respectively.

A Final Note

Reflecting on this week's briefing, we've witnessed positive moves in various sectors, including a noteworthy return to growth for UK manufacturing and a strong housing market outlook. Despite concerns about AI's impact on job markets, there is a clear opportunity for UK businesses to adapt, keeping the job market safe whilst driving favourable GDP growth.

Additionally, as frozen tax thresholds affect income for pensioners, it underscores the importance of having a robust, tax-efficient plan to protect your wealth now and in the future. It’s here that tax-efficient products such as the EIS and SEIS can become a crucial consideration for investors.

At GCV, we remain committed to providing the latest insights into the investment and wider economic landscape in order to support investors in making well-informed decisions when choosing where to allocate their capital.

If you would like to find out more about a number of tax-efficient investment strategies available to UK investors, discover our range of downloadable resources here.

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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.