Investment key risks
- Your capital is at risk.
- Investing in early stage companies involves risks including loss of capital, illiquidity, lack of dividends and dilution.
- Equity investments made via Newable Ventures Limited should be considered as part of a diversified portfolio.
- Past performance is not a predictor of future performance. Newable Ventures Limited does not give tax or investment advice.
- The availability of tax relief depends on individual investors’ circumstances, and on investee companies’ qualifying status, both of which may be subject to change.
Investing in shares, especially shares in small and early stage companies, is an inherently risky process. Below we have summarised of the major risks and considerations that you should be aware of:
Potential for Loss
An investment in shares (equity) does not guarantee that your money will be returned to you. Many small, early stage businesses fail, and if a business you invest in fails, neither that company, nor Newable Ventures Limited will pay you back your investment. You are strongly advised not to invest more than you can afford to lose.
Diversification means spreading your money across a wide variety of investment types – is an important way to reduce the overall risk of investing. Do not put all your eggs in one basket. Investors should not invest more than 10% of their investable assets in shares in early stage companies.
Lack of Liquidity
It is highly unlikely that you will be able to sell your shares quickly or easily. Shares in companies marketed or invested in through Newable Ventures Limited’s EIS and/or SEIS Funds, are unlikely to be traded on stock markets. You should be prepared to wait until the whole company is sold (if it eventually is), or floated on a stock market, to realise your shares.
No Regular Income
Businesses marketed at Newable Ventures Limited events or invested in by Newable Ventures Limited’s EIS and/or SEIS Funds, are generally not yet profit-making, or will choose to spend all their profits on growing the business. This means that you are unlikely to receive regular distributions of profits through dividends, so you are unlikely to receive any return on your investment, until you are able to sell your shares (which might not occur).
The majority of companies marketed at Newable Ventures Limited events or invested in by Newable Ventures Limited EIS and/or SEIS Funds are early stage companies, which lack significant trading or operating history. The success of these companies is uncertain and depends upon the ability of their management team to implement a strategy for growing the business. A company’s campaign page may contain estimates of anticipated performance, which are based on assumptions, which may or may not prove to be correct.
Conflicts of Interest
Newable Ventures Limited or one of its Directors or employees may already hold shares in a company being marketed at one of Newable Ventures Limited’s events, or being considered for investment by one of Newable Ventures Limited’s EIS and/ or SEIS Funds. In addition, they or one of their Directors may also have a previously existing business relationship with a company being either considered for investment by a Newable Ventures Limited Fund or presenting at a Newable Ventures Limited investment event.
Any investment you make may be subject to dilution in the future. This happens when a company issues more shares, in order to raise more money or incentivise staff. This means that the proportion of the company you own may be reduced, or ‘diluted’ over time. New shares issued by the company may also carry preferential rights to those acquired by you, meaning that payments such as dividends might be paid to them first (often the shares you purchase will come with ‘pre-emption rights’, which allow you to purchase more shares before they are made available to new investors, to reduce the effects of dilution).
Tax Treatment of Shares
The UK government provides certain types of tax relief for investment in small businesses. While Newable Ventures Limited encourages businesses to apply for these tax reliefs (such as EIS and SEIS reliefs) where appropriate, the final decision on whether the company and investment is eligible for tax relief is made by HMRC after the investment is completed. Eligibility for tax relief may also be lost due to your personal circumstances, or due to changes in the company’s activities or circumstances.
If you are unsure about any of the risks or warnings set out above, we recommend that you seek advice from an Independent Financial Advisor.