Investing in growth-focused businesses and projects
Investing in growth-focused businesses and projects is a high-risk, high-return strategy and carries significant risks, including illiquidity, loss of capital, rarity of dividends, and dilution. Such investments should only form part of a balanced portfolio and are intended for investors who are sufficiently sophisticated to understand the risks and capable of making their own informed decisions.
Is there a risk, and why?
Yes, all investments carry a level of risk that can cause their value to fluctuate due to various factors. To mitigate this, it is vital to adopt a balanced approach that considers both potential risks and returns. Impulsive decisions should be avoided. Past performance is not indicative of future trends or success.
Investments in this category may lack liquidity, meaning they are not easily converted to cash compared to traditional markets. There is a possibility of receiving less than the initial investment or, in some cases, no recovery at all. Any growth projections are speculative and cannot be guaranteed.
Purpose and reliance on Stockbrook Capital’s materials
Stockbrook Capital strives to ensure the accuracy of the information presented online and in printed materials. However, we do not warrant the completeness or accuracy of the data and disclaim liability for any errors or omissions. The materials provided are for informational purposes only and should not be relied upon for decision-making or market forecasting.
The content is not an offer to sell or an invitation to invest in Stockbrook Capital. Any projections, opinions, or estimates included are subject to change without notice. Users are responsible for ensuring they access the latest information and documentation.
Regulatory status and the importance of seeking advice
Investors are strongly encouraged to consult their own advisers and carefully evaluate the financial, legal, and other implications before making any decisions. While Stockbrook Capital adheres to FCA guidelines, it is important to note that we are not regulated by the Financial Conduct Authority.
The FCA classifies these investments as high risk due to the potential for significant losses.
Key Risks:
Risk of losing all your investment
- Most investments involve shares or bonds in start-up businesses, which have a high failure rate.
- Due diligence by the investment platform may be limited; you should perform your own research.
Limited liquidity
- Start-up investments are illiquid, and it may take years to recover your funds, often through rare events such as acquisitions or IPOs.
- Dividends are uncommon, and secondary markets for selling such investments are limited.
Complexity of investments
- Some businesses may invest in or lend to other ventures, creating additional layers of risk.
- The structure may be difficult to understand, and the overall risk is typically medium to high.
Diversification
- Concentrating investments in a single business or asset class is risky. Diversify to spread risk, and avoid allocating more than 10% of your portfolio to high-risk investments.
Risk of dilution
- New share issuances can dilute ownership and reduce the value of your investment.
- Additional rights granted to new shares may further diminish returns.
Limited protection
- These investments are not covered by the FCA’s regulatory protections or the Financial Services Compensation Scheme (FSCS).
- The Financial Ombudsman Service (FOS) may only address complaints against regulated platforms, not poor investment performance.
For more information on protecting yourself, visit the FCA’s website. Further details on investment-based crowdfunding can be found in the FCA's crowdfunding section.
