RISK WARNING: 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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Don’t invest unless you’re prepared to lose all the money you invest. NextCrowd promotes high - risk investments and you are unlikely to be protected if something goes wrong.
Investing in equity and debt crowdfunding involves high risks, which may include long-term investment horizons, illiquidity, lack of income, defaulted loans and potential dilution. Any investor needs to be in the position to afford a total loss of capital invested. Investments that are made via Peer to Peer platforms should not be considered deposits like a bank. Your capital is at risk and is not covered by the Financial Service Compensation Scheme (FSCS).
NextCrowd is targeted at members who have the knowledge and experience to understand these risks and make their own investment decisions. You will NOT invest through NextCrowd but through the relevant crowdfunding website which also has signed off the content as a Financial Promotion on its own website. NextCrowd is not the originator of the financial promotions that appear on its site. However we do to the best of our ability carry out limited compliance checks on the originator and the company seeking funding to seek to ensure they are conforming to FCA regulations and anti-money laundering equity/requirements as appropriate. Business Agent Limited, trading as NextCrowd, takes no responsibility for this information or for any recommendations or opinions made by the companies or its users.
The pitch rating report prepared by CrowdRating and published on NextCrowd.co.uk does not constitute a personal recommendation, offer or solicitation to buy or sell investments. The pitch rating report should be used as part of your own research to assess whether or not you should make an investment, but only as a single factor and not as a definitive source. If you require advice based on your personal circumstances or are in any doubt about investing, you should obtain advice from an appropriately qualified independent professional. Pitch rating reports are based on publicly available information, including information provided by the investment issuer. CrowdRating assesses that third party information without verifying its accuracy and does not make any representation or warranty as to the accuracy of the information on which it bases its assessments. CrowdRating’s responsibility for their contents is set out in the CrowdRating Terms and Conditions. Business Agent has not prepared or reviewed the contents of the pitch rating reports and is not responsible to you for their contents. Nothing in this Summary shall limit or exclude any liability CrowdRating owes to you under the UK regulatory system. The information and opinions are provided as at the date of the report and are subject to change without notice.
Capital invested in crowdfunding projects is at risk and you may lose some or all of your investment and/or find it difficult to sell. If the investment issuer defaults on its obligations to you, you will not be entitled to compensation from the Financial Services Compensation Scheme. You should only invest in illiquid securities as part of a diversified investment portfolio. Neither CrowdRating nor Business Agent offers personal recommendations on whether investments are suitable for you in light of your investment objectives and financial circumstances.
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Investing in the shares of start-up and early-stage companies can be satisfying and financially rewarding. But it is also very risky.
For example:
There is a significant risk that you will lose your investment. Most start-up companies fail, and it can be many years before even the most successful start-up company begins to pay dividends. You are therefore much more likely to lose your investment than you are to see a return of your capital and a profit;
If you make an investment, you will probably not be able to sell it for many years. Although it is sometimes possible to sell shares in a start-up company to other shareholders in the same company, it is much more likely that a share sale will be impossible unless and until the company is listed on a stock exchange or bought by another company. Even the most successful of start-up companies can take years to get to the point where it can be listed or sold;
Your investment will probably be diluted. If you invest, you will receive shares in the company. If the company needs to raise more capital at a later date, it may issue new shares. If those shares are offered to existing investors and you choose not to buy any more shares, your share of the company will decline. Your share of the company will also decline if the company only offers its new shares to new investors. The company might also want or need to offer its new shares on better terms than the terms available on its existing shares. For example, the new shares might have preferential rights to dividends or sale proceeds, a right of first refusal on further share issues, or better voting rights than the existing shares. Each of these things is likely to be to your disadvantage.
Dividends are payments made by a business to its shareholders from the company’s profits. Most of the companies pitching for equity are start-ups or early stage companies, and these companies will rarely pay dividends to their investors. This means that you are unlikely to see a return on your investment until you are able to sell your shares. Profits are typically re-invested into the business to fuel growth and build shareholder value. Businesses have no obligation to pay shareholder dividends.
Diversification involves spreading your money across multiple investments to reduce risk. However, it will not lessen all types of risk. Diversification is an essential part of investing. Investors should only invest a proportion of their available investment funds and should balance this with safer, more liquid investments
Giving money to a company can be satisfying; especially if it’s doing – or wants to do – something you think is worthwhile.
However, if you decide to give money to a company and it reaches its minimum target, it will be impossible, or almost impossible, to get it back - even if you change your mind immediately.
Lending money to start-up and early-stage companies can be satisfying and financially rewarding. But it is also involves risk including Loss of investment and interest payments, Lack of liquidity, Restricted redemption rights, Unsecured investments and being bottom of the chain to be paid when a business winds up. Most start-ups fail, and it can be many months or years before a successful start-up begins to make enough money to be able repay its debts. There is a significant risk that the company you lend money to:
• Will not be able to pay you back. If the company you lend money to cannot afford to repay you, you will lose some or all of the money you loaned to the company. You will also lose some or all of the interest you expected to receive in return for your loan;
• Will not be able to pay you back on time. If the company you lend money to cannot afford to repay you when the repayments are due, you may have to wait – perhaps for many months or years – to recover the money you loaned to the company and the interest you expected to receive in return for your loan;
• Will become insolvent. If the company you lend money to cannot afford to pay its debts to you or to its other creditors, the company may be wound up, dissolved or put it into receivership, liquidation or administration. If any of these things happen, you may not be able to recover the money you loaned to the company or the interest you expected to receive in return for your loan. You may also have to wait many months or years to recover any payment, and that payment may be much less that you would have been entitled to receive if the company had not become insolvent. This might happen because some of the company’s creditors (including the receiver, liquidator or administrator) might be entitled to receive their money before other creditors, and when they have been paid, the company might not have sufficient funds left to pay you.
• Investments that are made via Peer to Peer platforms should not be considered deposits like a bank. Your capital is at risk and is not covered by the Financial Service Compensation Scheme (FSCS).
Estimated reading time: 2 min
Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be very complex and high risk.
What are the key risks?
Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection here. [https://www.financial-ombudsman.org.uk/consumers]
If you are interested in learning more about how to protect yourself, visit the FCA’s website here. [https://www.fca.org.uk/investsmart]
For further information about minibonds, visit the FCA’s website here. [https://www.fca.org.uk/consumers/mini-bonds]
