What are the risks involved?
Every investment comes with a certain level of risk. Since investing in start-ups are considered as high-risk high-returns investments, it is important for investors to understand the risks involved before deciding to invest.
- Early-stage investments are risky in nature. Given the high rate of failure for startups, investors are at risk of losing much or all of his or her investment.
- Liquidity refers to how readily an investor can reclaim their capital without a loss in value.
- Successful startups generally take around 5 to 7 years to get acquired or to IPO, and during this time, capital is generally locked up. Additionally, unless there is a buy-and-sell secondary market, investors cannot easily be released from his or her investment in the company.
- There is also the risk of share dilution due to several rounds of funding.
While investors are typically rewarded with higher returns from taking on the additional risk, there is certainly the risk for huge losses.
Protection for investors
We are continuously improving our deal screening and onboarding processes. We carry out mandatory company incorporation, financials, and management team and shareholder/director checks at the earliest stage that allows us to identify issues and complete information collection requirements earlier in the process. All campaigns have to undergo a stringent 3-step progress:
- Company's Validation
- Company's Assessment
- Company's Accreditation
This process is carried out by our own internal investment committee who review all material raised by an issuer. Because of our thorough deal analysis and investor anchoring process, this mean that only 2% of deals get onboarded onto our platform.
FundedHere ensures that every investment opportunity carries prominent risk warnings and that all statements made in the issuer’s investment deck are fair, clear and not misleading. We will continue to review our screening and evaluation processes to minimise risks to investors and to build the reputation of our platform. We do not take the trust from our investors for granted and work very hard to maintain it.