Our business involves investments in unlisted companies including smaller, early stage and start –up companies. We may also promote funds which are collective investments investing in such companies. We will refer to these as venture capital investments. Such investments are not suitable for all investors because they involve significant risks, including the risk that you may lose some or all of the money invested. Other risks include:
Any investment of this kind is likely to be highly illiquid. There is unlikely to be any secondary market or other clear means of accessing an investment in such investment.
- Unlimited duration
There will usually be no time limit for any of investment such as this. It may not be possible to liquidate, redeem or withdraw from any venture capital investment. Investment should be regarded as long-term i.e. of at least [5 years] duration
- Risk of underlying investments
The companies involved are likely to have a limited operating history and may be start-up or early stage companies. Statistically many such companies will fail, leading to possible loss of the whole sum invested.
- No income
Very few venture capital investments will pay dividends or other investment returns apart from any profit on exit from sale, listing of shares etc. (where the relevant companies are successful and an exit, listing etc. actually happens). You should not look to an investment such as this to provide you with a reliable income – venture capital investments will not be an appropriate investment if you need a regular income from your investments.
Shares in companies such as these may involve dilution. A venture capital business may issue new shares or options to acquire shares. This may lead to you owning a reduced proportion of the company which will affect voting rights, dividends and the value of your shares. The new shares may have preferential rights to those that you own.
Investments such as these are likely to have tax consequences which will depend on the individual circumstances of each investor. You should take appropriate tax advice from a suitably qualified professional in relation to your tax position.
Do not invest in venture capital investments unless you understand all the risks. If you are in doubt about any aspect of investing in venture capital investments, you should consult an appropriately qualified and authorised adviser who is authorised and regulated by the Financial Conduct Authority.
You should carefully read any offer documents, information memoranda and other documentation relation to any investment. These may contain further specific risk warnings.
Investments such as these will not be covered by the Financial Services Compensation Scheme.