Nothing on this website shall constitute an offer of or the solicitation of an offer to invest or sell, nor shall there be any sale of any investments or commitments in connection with this website in any jurisdiction in which such offer, solicitation or sale would be unlawful, including in the United Kingdom. The contents of this website do not constitute investment, legal, tax or other advice and should not be taken as such.
Investment in businesses entails substantial risks as well as the possibility of high rewards. It is highly speculative and potential investors should be aware that: (a) they could lose the total value of their investment; and (b) no established market exists for the trading of shares in private companies, making it difficult to sell your shares. It should not be assumed that investments will be profitable and Investors are reminded that and that they might not get back the amount that they originally invested. Connected Capital LLP cannot advise on the merits or risks of investments.
Investing in businesses which are not quoted on any stock exchange carries risks, in particular:
- Loss of Capital. Investors should only invest an amount that they are willing to lose and should balance this with safer, more liquid investments, to spread risk. Many early-stage businesses fail or do not scale as planned.
- Dependence on the directors. The success of many investee companies will depend in part upon the ability of their directors to develop and maintain a strategy that achieves the company’s investment objectives. As a result, the departure of a director may result in the deterioration of an investee company’s performance.
- Lack of operating history. Some companies have no substantive operating history upon which prospective investors can evaluate likely performance.
- Forecasts and Past performance. Neither past performance nor forecasts should be seen as an indication of future performance.
- Diversification. You can reduce your risk by spreading your investment across multiple deals, rather than investing all available funds in one deal.
- Illiquidity. Equity investments lack liquidity, meaning that they cannot be sold easily and they are unlikely to be listed on a secondary trading market, such as AIM or the London Stock Exchange.
- Rarity of Dividends. Dividends are payments made by a business to its shareholders from the company’s profits. Many start-ups and early-stage companies rarely pay dividends to their investors. This means that you are unlikely to see a return on your investment unless you sell your shares. Even for a successful business, this is unlikely to occur for a number of years from the time you make your investment.
- Dilution. Equity investment in shares may be subject to dilution, if the investee company issues more shares. If under the investor agreement, investors are given “pre-emption rights”, in the event of a further fundraising, they are entitled to buy a proportionate number of shares, enabling them to maintain their percentage shareholding in the company. If investors do not exercise their pre-emption rights, their shareholding will be diluted, affecting the voting rights, dividends and value of their shares.
Potential investors are strongly advised to take professional and financial advice before making any investment decisions.
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