Risk warnings

You may be investing in companies that have been recently started or are in very early stages of their development. You will be able to benefit from the rewards that come with success of these businesses, but there are also risks that things may not turn out as you hope. We have set out what we consider to be the most important areas of risk which you should fully understand and accept before you make an investment.

Loss of Capital

Most new businesses fail and if you invest in a start-up business it is more likely than not that you will lose the capital that you have invested. If the business fails then neither it nor we will pay back what you have lost. There are also risks in investing in established businesses that wish to grow rapidly. If they succeed then there will be profits but if they fail you will lose what you have invested. It is important that you take these matters into account when deciding what to invest in, how much to invest, and how to spread your investments.

Liquidity issues

Once you have made your investment and bought your shares through our platform you will not find it easy to sell them, as the shares are unlikely to be listed on a public market and even successful companies do not always list their shares. Your money is likely to be tied to your investment and will not easily be liquidated because the shares you have bought will not be sold easily. Your investment in a company will probably remain illiquid until the company floats on a recognised exchange or is sold.

Do not expect dividends

The businesses in which you can invest on our platform will almost never pay dividends. A company can only pay dividends to its shareholders out of profits but most companies seeking investment from our platform will wish to re-invest profits into the business to help it grow and make it more valuable. You should not invest in companies on our platform expecting a regular income.

Change of Management and Small company risks

Investee companies may often be relatively small and highly dependent on the skills of a small group of key executives. Investments may often be especially vulnerable to changes in technology, government actions, changes in statute and competitive pressures. In particular, there may be changes to the EIS legislation which may affect Investor’s tax positions.

Companies are run by their boards of directors who are accountable to the shareholders and who can be changed at the behest of the shareholders who have voting shares. Most companies on our platform offer non-voting shares and therefore investors will not have a right to change the management of the company if they feel that a change is needed.

Dilution

When you buy a specific number of shares through our platform you will in fact be buying a specific percentage of the company. However as the company continues to raise money new shares will be issued and your percentage will be diluted. If the company decides to raise more money it may issue new categories of shares which have different rights from your shares and this may dilute the value of your shareholding in the company, although often raising additional capital makes the company as a whole more valuable.

Diversify

Most investment advisers would recommend that you would only invest in businesses such as those that appear on our platform as part of a diversified investment strategy. This would mean investing in small amounts spread over many businesses rather than putting all your eggs in one basket. It is also important that only a small proportion of the total capital that you have to invest is invested in businesses such as those that appear on our platform. To do otherwise would substantially increase your risk.

Special Risks

Different businesses have different risks. It is not possible for us to list all special risks that might apply to investments on our platform. Investors should consider the risks that apply to the category of business in which they are thinking of investing.

Advice

Neither we nor any of our partners carry out detailed due diligence in respect of the companies on our platform seeking investment so you will be investing on your own judgement without specialist advice from Pitchswag. It is therefore your responsibility to conduct your own due diligence and without conducting due diligence your risks increase significantly. If you require any kind of financial investment advice you should consult your own financial adviser.

Past performance

The value of shares in any investee companies may go down as well as up and Investors may not get back the full amount invested. Investors should not consider investing unless they can afford a total loss of their investment. Investments in unquoted shares carry higher risks than investments in quoted shares and involve a degree of risk as well as the opportunity of reward.

Future performance

Any projections of future performance are based on the internal calculations of the Investee Company and Pitchswag and are subject to change at any time.

Tax

The impact of tax on successful and unsuccessful investments can be significant. We do not offer any advice on your tax affairs or on those of the companies seeking investment. You will need to consult your own accountant or financial adviser to obtain such advice.

Any tax reliefs referred to are those currently applying or expected to apply. However, Investors should be aware that tax reliefs can change. Their applicability and value will depend upon the individual circumstances of a given Investor, and Investors should seek their own independent professional advice on their particular tax situation and the application of such tax reliefs prior to making any investment. Whilst many of the Investments set out on this website may qualify for EIS and other tax advantageous breaks, there is no guarantee that EIS status or other tax efficient status can be maintained throughout the life of the investment.