Loss of capital
Many small companies may fail. If you invest in a company through the Crowd for Angels platform, rather than seeing a return of capital or a profit, it is possible that you will lose some or all of your invested capital. You should not invest more money through the Crowd for Angels platform than you can afford to lose.
Forward looking statements
Pitches on the Crowd for Angels platform may contain forward-looking statements or assumptions which inter alia relate to future projections, prospects and developments. Forward-looking statements are identified by their use of terms and phrases such as “believe”, “could”, “envisage”, “estimate”, “intend”, “may”, “plan”, “will” or the negative of those, variations or comparable expressions.
Any such statements are based on trends or expectations at the time of writing and are subject to risks and uncertainties that could cause actual outcomes to differ materially from those expressed or implied by those statements. Such statements should be regarded as illustrative expressions only which are believed to be reliable at the time of writing but should not be taken as implying any indication, assurance or guarantee that such trends or expectations are correct or exhaustive or will continue in to the future.
Each reader must make their own independent assessment of the information provided in a pitch and seek independent, relevant and specialist professional advice prior to placing any reliance on it. These risk warnings are not a substitute for that professional advice and any such reliance is placed at your sole risk. Crowd For Angels makes no judgement or opinion of the likelihood of targets being achieved.
Investments in small companies made through the Crowd for Angels platform will be highly illiquid. It is unlikely that there will be a secondary market for the shares or debt securities issued on Crowd for Angels. This means that you are unlikely to be able to sell/realise your investments until and unless the company floats on a securities exchange or is bought by another company. Even for a successful company, a flotation or purchase is unlikely to occur for a number of years from the time you make your investment. Even if you can cash in your investment you may not always be able to do so quickly or for as much money as you initially invested. Crowd bonds and other debt securities have to be held until maturity before they become fully repayable.
Rarity of dividends
Many small companies do not pay dividends as they look to reinvest cash back into the growth of the business. This means that if you invest in shares in a company through the Crowd for Angels platform, even if it is successful, you are unlikely to see any return of capital or income payments until you are able to sell your shares in the company. Even for a successful company, this is unlikely to occur for a number of years from the time you make your investment.
Investments in shares of private companies made through the Crowd for Angels platform are likely to be subject to dilution. This means that if companies raise additional capital at a later date and you do not take part in the fundraise, the percentage of the investee company that you own will decline.
Any new shares issued may also have certain preferential rights to dividends, sale proceeds and other matters, and the exercise of these rights may work to your disadvantage. Your investment may also be subject to dilution as a result of the grant of options (or similar rights to acquire shares) to employees of, service providers, or certain other parties connected with, the Investee Company.
Investing in shares or crowd bonds/debt securities issued by small companies should only be done as part of a diversified portfolio. This means that you should invest relatively small amounts in multiple companies rather than a lot in one or two companies. It also means that you should invest only a small proportion of your investable capital in either of these asset classes, with the majority of your investable capital invested in safer, more liquid assets.
The availability of any tax relief, including EIS, SEIS and ISA related schemes, depends on the individual circumstances of each investor and may be subject to change. If you are in any doubt about the availability of any tax reliefs, or the tax treatment of your investment, you should obtain independent tax advice before proceeding with your investment.
No Access to FSCS
Investments made through the Crowd for Angels platform are not covered under the Financial Services Compensation Scheme.
Crowd bonds specific risks
The "crowd bonds" available through Crowd for Angels are often referred to as "high-yield" bonds. These are debt securities which have not been graded by any credit rating agency and have been issued by companies with lower or no credit ratings. As a result they represent a higher risk for the investor, so tend to offer higher interest payments than other debt securities.
Crowd bonds have a higher risk of default than rated debt instruments. This means that the issuer of these bonds is more likely to fail to meet payments of interest and principal and may have a higher risk of insolvency. This means a greater risk of loss of your capital or investing without any returns.
Security may be insufficient to cover capital
Crowd bonds offered via our site will normally be secured against assets of the company, as described in the individual company pitches. Independent valuations of those assets may be inaccurate, the prices of assets held as security may fluctuate and it may be difficult to realise any security within a reasonable time or at all. While crowd bonds may be secured, this does not mean that repayment of interest or principal is guaranteed.
Crowd bonds will typically have a maturity of between 1-5 years but may be for longer. You may have no rights or be unable to cash them in early or sell them at any price as they are unlikely to be sold or dealt with on any investment exchange or public market and there will be no secondary market for them.