For better understanding of the risks involved when investing in shares, and funds on Conectivest, please read the following risk summary. Please be invest aware and diversify your investments.
The need for diversification when you invest
Diversification involves spreading your money across different types of investments with different risks to reduce your overall risk. However, it will not lessen all types of risk. Diversification is an essential part of investing. Investors should only invest a proportion of their available investment funds via Conectivest and should balance this with safer, more liquid investments.
Risks when investing in equity or funds
Investing in shares (also known as equity) on Conectivest does not involve a regular return on your investment unlike loans which offer interest paid regularly.
Investing in a fund may help to diversify your investments and to spread the risk but general risks while investing in equity continue to apply. Further specific risks are set out on the applicable fund pitch page
Please bear in mind the following particular risks for equity and fund investments:
Loss of investment
The majority of start-up businesses fail or do not scale as planned and therefore investing in these businesses may involve significant risk. It is likely that you may lose all, or part, of your investment. You should only invest an amount that you are willing to lose and should build a diversified portfolio to spread risk and increase the chance of an overall return on your investment capital. If a business you invest in fails, neither the company – nor Conectivest – will pay you back your investment.
Lack of liquidity
Liquidity is the ease with which you can sell your shares after you have purchased them. Buying shares in businesses pitching through Conectivest cannot be sold easily.
Rarity of dividends
Dividends are payments made by a business to its shareholders from the company’s profits. Most of the companies pitching for equity on the Conectivest website are start-ups or early stage companies, and these companies will rarely pay dividends to their investors. This means that you are unlikely to see a return on your investment until you are able to sell your shares. Profits are typically re-invested into the business to fuel growth and build shareholder value. Businesses have no obligation to pay shareholder dividends.
Any investment in shares made through Conectivest may be subject to dilution in the future. Dilution occurs when a company issues more shares. Dilution affects every existing shareholder who does not buy any of the new shares being issued. As a result an existing shareholder's proportionate shareholding of the company is reduced, or ‘diluted’-this has an effect on a number of things, including voting, dividends and value.
Loss of investment and interest payments
If a business you invest in fails, neither the company you invest in – nor Conectivest – will pay you back you investment. You should only invest an amount that you are willing to lose and should build a diversified portfolio to spread risk.
Early Call Risk
The Issuer has the right to repay you your money at any time prior to the formal repayment date. Your investment may be materially curtailed because of this.