Risk Warnings

Investing in start-ups, early-stage and other growth-focussed businesses can be very rewarding, but it involves a number of risks and challenges.

Here are a few important things for you to consider before choosing to invest in displayed businesses on Tokenise:

Loss of Capital

Most start-ups, early stage and other growth focussed businesses fail. If you invest in a business displayed on the platform, it is more likely that you will lose all of your invested capital rather than see a return of capital or profit. You should not invest more money in the types of businesses displayed on the platform than you can afford to lose without altering your standard of living. Please also note, if a company you invest in fails neither the investee company, Tokenise or the Financial Services Compensation Scheme (FSCS) will compensate you for the loss of invested capital.

Illiquidity

Almost all the investments you make in businesses displayed on the platform will be highly illiquid. It is very unlikely that there will be a liquid secondary market for the shares of the business, meaning you should assume you will be unlikely to be able to sell your shares until and unless the business floats on a stock or securities exchange, or is bought by another company. Even if the business is bought by another company or floats, your investment may continue to be illiquid. For a successful business, a flotation or purchase is unlikely to occur for a number of years from the time you make your investment. For businesses for which secondary market opportunities are available (including any available on the platform), it can be difficult to find a buyer or seller, and investors should not assume that an early exit will be available just because a secondary market exists.

Rarity of Dividends

Start-ups and early stage businesses rarely pay dividends. This means that if you invest in a business through the platform, even if it is successful you are unlikely to see any return of capital or profit until you are able to 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.

Diversification

Choosing to invest in the types of businesses displayed on Tokenise should only be done as part of a diverse portfolio. This means you should only invest a relatively small portion of your investable capital in such businesses, rather than larger amounts in one or two businesses, choose smaller amounts over multiple businesses.  The majority of your investable capital should be in safer, more liquid assets.

Dilution

Any investment you make in a business displayed on the platform is likely to be subject to dilution. This means that if the business raises additional capital at a later date, it will issue new shares to the new investors, and the percentage of the business that you own will decline. These new shares may also have certain preferential rights to dividends, sale proceeds and other matters, and the exercise of these rights may work to your disadvantage. Your investment may also be subject to dilution as a result of the grant of options (or similar rights to acquire shares) to employees of, service providers to or certain other contacts of, the business.

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