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.
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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.
Bank of England
Weekly Briefing
Jo Bentham
· 3 min read
· Updated on

Weekly Briefing: PE proves resilient, UK economy returns to growth & shock rise in inflation

In this week's edition of the GCV weekly briefing, we cover headlines from the past week including Pitchbook’s Annual European PE Breakdown report, the latest figures on the UK’s economic growth, and more.    

                                 

UK Economy

UK Economy Returned to Growth in November

  • The UK economy grew in November 2023, with a 0.3% increase in gross domestic product (GDP) following a 0.3% decline in October.
  • Consumer spending, driven by Black Friday sales, contributed to the economic recovery during the start of the Christmas shopping season.
  • The services sector – including retail, car leasing, and video games companies – played a key role in the bounce-back, according to Office for National Statistics Chief Economist Grant Fitzner.
  • However, Fitzner reiterated that the economy has shown limited growth over the past year.
    During the three-month period leading up to the end of November, there was an estimated 0.2% decline in GDP, reflecting the strain on households amidst the ongoing cost of living crisis.


UK Inflation Shows Surprise Rise

  • Inflation sped up for the first time in 10 months in December, rising to 4.0%.
  • This is an increase from November's more-than-two-year low of 3.9%, and contrasted with expectations for a drop to 3.8% in a Reuters poll of economists.
  • The ONS said December's increase in inflation was driven by a rise in tobacco duty that took effect in late November 2023.
  • The rise has put into question market expectations for an early Bank of England (BoE) rate cut, with Reuters stating that “interest rate futures implied a roughly 60% chance that the BoE would start to cut rates by mid-May, down from just over 80% late on Tuesday 16th January.
  • Inflation began to fall faster than expected in the latter months of 2023, leading some economists to predict that it would be back at the BoE's 2% target by April or May this year.
  • Michael Saunders, a former BoE policymaker, said: “The bigger picture is that inflation is falling more sharply overall than the Bank of England had expected a few months ago. Their thoughts will be starting to turn towards interest rates possibly coming down later this year [...] perhaps starting around the middle of the year.”

 

UK Tax Update

HMRC Cracks Down on ‘Side Hustle Tax’

  • Driven by companies such as Airbnb, Vinted, Etsy and Fiverr, we have witnessed significant growth in the gig economy in recent years.
  • The UK Government has been closely monitoring gig economy numbers, which are anticipated to surpass £72 billion annually, and since 1st January 2024, digital platforms such as those mentioned above have been required to collect information on how much money their users make.
  • The new rules from HMRC aim to reduce tax avoidance by sellers who regularly use digital platforms to earn over £1,000 per tax year. This threshold figure is known as the trading allowance.
  • Online sellers or freelancers earning an income above this figure from self-employment, property, or other sources may need to register for self-assessment and pay tax on the profits.
  • The tax owed by the seller will remain unchanged from previous years; however, the distinction lies in the fact that the UK Government will now have a clearer understanding of an individual's income moving forward.

 

Private Equity

PE Proved Resilient in 2023

  • Pitchbook’s Annual European PE Breakdown has stated that “the best word to summarise the trends of 2023 in European PE would have to be resilience.”
    According to the report, deal value in 2023 was down 26.5% YoY, but deal count increased 4.4% YoY.
  • Deal value was also still 10% to 20% higher than pre-2021 levels – with 2021 and 2022 considered to be outlier years – exemplifying the resilience of PE as an asset class despite macroeconomic headwinds.
  • In terms of capital raised, 2023 was an almost-record year for PE fundraising in Europe, with almost €120 billion in new capital raised across 117 funds.

 

PE Deal Activity 



Source: Pitchbook
Notes: Accurate as of 31st December 2023.

 

Investing

Chancellor Calls for Further Investment Into the UK’s Tech Industry

  • At the World Economic Forum in Davos, Chancellor Jeremy Hunt has championed British excellence in tech, calling for more investment into the UK’s tech industry.
  • Hunt said: “We boast some of the best and brightest businesses in sectors of the future like digital technology and life sciences. It's these areas of strength that are going to drive growth across the UK economy in years to come.”
  • Sitting on the ‘Technology in a Turbulent World’ panel, the Chancellor also expressed, when discussing AI, that “we have choices now and the choice we need to make is how to harness it so it is a force for good”.
  • Sachin Agrawal, UK Managing Director at Zoho UK, said: “Emphasis on tech investment is a welcome sight for enterprise businesses, and funding would potentially enable these companies to continue research and development projects for emerging technologies to develop solutions that could help to place the UK as a global hub for technology advancements.”

 

A Final Note

It’s excellent to see from Pitchbook’s analysis that PE proved resilient throughout 2023, showing continued growth despite the obvious macroeconomic pressures of recent years.

Moreover, it’s somewhat surprising to see a rise – though small – in UK inflation amidst expectations of a continuous fall over this year. We’ll be sure to monitor this closely in the coming weeks and months to see how it will impact the BoE’s upcoming interest rate decisions. 

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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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.