Don’t invest unless you’re prepared to lose all your money. These are high-risk investments and you are unlikely to be protected if something goes wrong. Take 2 mins to learn more.
Financial Adviser Confirmation
THIS CONTENT IS FOR PROFESSIONAL ADVISERS ONLY
Investments in unquoted companies carry high risks and investors could lose all funds invested. No established market exists for the trading of shares in private companies, making it difficult to sell shares. The value of tax reliefs depend on personal circumstances and may be subject to change in the future. Investors are encouraged to take independent legal, tax and financial advice before considering an investment.
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3. You won’t get your money back quickly
Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.
The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
If you are investing in a start-up business, you should not expect to get your money back through dividends. Start-up businesses rarely pay these.
4. Don’t put all your eggs in one basket
Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.