To help you understand the risks involved when investing in shares and convertible loans on our website, please read the following risk warnings:
Your capital is at risk if you invest through Current Capital. Young, growth based businesses have a high failure rate or do not scale as planned and therefore investing in these businesses may involve significant risk. You must assume that many of the businesses in which you invest are likely to experience difficulties and in some cases will become insolvent. As a result it is likely that you may lose all, or part, of your investment.
You should only invest an amount that you are willing to lose and should build a diversified portfolio to spread risk and increase the chance of an overall return on your investment capital. If a business you invest in fails, neither the company – nor Current Capital – will pay you back your investment.
Diversification is an essential part of investing. You should always seek to invest in multiple ventures to spread the risk. The tax advantages are exactly the same, but you are less likely to end up with zero capital should one or more business fail. Investors should only invest a proportion of their available investment funds via Current Capital and should balance this with safer, more liquid investments like ISAs, bonds and publicly-traded shares.
Liquidity is the ease with which you can sell your shares after you have purchased them. Shares in early-stage and growth businesses are extremely illiquid – meaning that there are very few opportunities to buy and sell them. Once you’ve bought shares in a business, it is extremely unlikely that you will be able to sell them through a secondary marketplace. In other words, it is likely that you would have to hold on to them until there is a strategic exit – like a share buy-back, management buy-out or a complete sale of the business.
Current Capital investment opportunities will have clearly defined exit strategies to help ensure your capital is returned. This is not guaranteed and is subject to a successful fundraise and implementation of the business plan.
RARITY OF DIVIDENDS
Dividends are payments made by a business to its shareholders from the company’s profits. Most of the companies on the Current Capital website are start-ups or early stage companies, and these companies will rarely pay dividends to their investors. That means you are unlikely to receive any income from your shares, even for profitable enterprises. It is also unlikely that you will 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.
Any investment in shares made through Current Capital may be subject to dilution in the future. If the business wants to raise more capital at a later date, it will probably issue new shares to new investors, thereby reducing the percentage that you own.
Dilution affects every existing shareholder who does not buy any of the new shares being issued. As a result an existing shareholder’s proportionate shareholding of the company is reduced, or ‘diluted’ – this has an effect on a number of things, including voting, dividends and value.
Some businesses who pitch for equity investment through Current Capital offer A-Ordinary Shares, which may include pre-emption rights that protect an investor from dilution. In this situation the business must give shareholders with A-Ordinary Shares the opportunity to buy additional shares during a subsequent fundraising round so that they can maintain or preserve their shareholding. Please check a pitch, and the Articles of the company to see if the shares you are buying will have these pre-emption rights. Most companies do not offer pre-emption rights for B Investment Shares.
TAX TREATMENT OF SHARES
Tax reliefs are not guaranteed. They depend on the company maintaining their qualifying status, and may be withdrawn at any time by HM Revenue & Customs. In addition, the tax treatment of EIS and SEIS schemes in the future depends on the individual circumstances of each client/investor and may be subject to change in future.
PAST + FORECAST PERFORMANCE
If you are investing in businesses with a trading history, then you should not assume that their past performance is a reliable indicator of future performance. By the same token you should not assume that a company’s forecasts for future sales are reliable or likely to happen.
Current Capital will provide detailed business plans to help investors understand the fundamental strength of a company.
LEADERSHIP + MANAGEMENT
The success of a company will depend largely upon the ability of its directors and key personnel to develop and maintain a strategy that achieves the company’s investment objectives.
We will be focusing on businesses that have strong, proven leadership along with the relevant tools that give the company the best opportunity to succeed.
Current Capital is not able to provide advice on any investment activity. If you require professional advice, please engage an adviser authorised and regulated by the FCA
Remember to diversify your investments and/or seek professional advice from an adviser who is qualified, authorised and regulated by the FCA.
Throughout our site you will find links to external websites. Although we make every effort to ensure these links are accurate, up to date and relevant, we cannot take responsibility for pages maintained by external providers.
Policy most recently updated 23/05/2017