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Introduction to crowd-sourced funding
What are the risks of crowd-sourced funding?
What are the risks of crowd-sourced funding?
Updated over a week ago

Crowd-sourced funding is risky. Firstly, please read the general CSF risk warning which applies to all CSF offers.

An investment in companies using the CSF regime should be seen as high-risk and speculative. A description of the main risks that may impact the company will be set out in the "Key risks" section of the company's CSF offer document.

There are also other, more general risks associated with all companies, such as risks related to general economic conditions.

Set out below are some risks to consider - this is not a complete list:

  • Shares may hard to sell. Your investment is unlikely to be 'liquid'. This means you may not be able to sell your shares quickly, or at all.

  • Share price may decrease. The value of of your investment might decrease. You may lose your entire investment.

  • Dilution. The value of investment may be diluted (ie reduced) if the company undertakes further funding activities, such as issuing more shares.

  • Start-up risk / lack of company track record. Some businesses that raise money through crowd-sourced funding are new or in the early stages of development. The company may be at the "proof of concept" stage with limited trading history. The company may not achieve commercial viability for a number of reasons, such as unproven market or inability to scale.

  • Insolvency risk. The company may not yet profitable. The company may be seeking funding to achieve its objectives. There is no guarantee that funding will be available on favourable terms or that the company will receive any level of funding at all.

Before making an investment decision, please:

  • Review the general CSF risk warning

  • Review the company's CSF offer document, including the "key risks" section

  • Ask questions the company questions via the communication facility before investing

  • Do your own research

  • Seek independent legal, financial, tax or other professional advice

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