Our Risk Warning
Investing in or lending to early-stage businesses can be highly rewarding, but there are a number of risks that prospective investors should be aware of before investing. The following risk warnings apply to the Company into which investment is being sought.
Links to External Websites
Throughout the documents available and on associated websites you may find links to external websites. Neither the Company nor Growthdeck can take responsibility for pages maintained by external providers.
Investment loss
Your capital is at risk if you invest in early-stage businesses which have limited revenues and are not financially self-sufficient. Developing and growth businesses have a high failure rate. You must assume that many of the businesses of this profile are likely to experience difficulties and in some cases will become insolvent. As a result you may lose all of your capital.
Limited liquidity
Shares in early-stage 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 sale of the business.
Rarity of dividends
Most early-stage and growth companies don’t pay any dividends to shareholders. That means you are unlikely to receive any income from your shares, even for profitable enterprises. You will need to wait for a successful exit, which cannot be guaranteed, before receiving any return of capital.
Share dilution
Shares in early-stage and growth companies tend to be subject to dilution. 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. Your investment could also be diluted as a result of options being granted to employees of, service providers to or certain other parties connected with, the Company.
Diversification
Prospective investors in EIS and other early-stage business opportunities should always consider the importance of spreading risk by investing in multiple ventures as opposed to a single opportunity. The tax advantages are the same, but you are potentially less likely to incur a total loss should one or more business fail. It is also important to have the majority of your investment portfolio in less risky asset classes such as Government bonds and publicly-traded shares.
Tax treatment of shares
Tax reliefs are not guaranteed. They depend on the venture maintaining its 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 investor and may be subject to change in the future.
Past and forecast performance
Potential Investors should not assume that the Company’s past performance is a reliable indicator of future performance. Furthermore, potential investors should not assume that a company’s forecasts for future sales are reliable or likely to happen.
Leadership
The success of a company will depend largely upon the ability of its executive directors to develop and maintain a strategy that achieves the Company's objectives.
Advice
Growthdeck Limited [FRN: 731176] is an Appointed Representative of Daedalus Partners LLP [FRN: 564221] which is authorised and regulated by the Financial Conduct Authority in the UK. Growthdeck is providing advice only to the Company and is not providing any advice to any prospective investors or any other party with relation to any investment activity. If you require professional financial advice you should engage a suitably qualified independent advisor.