To help you understand the risks involved when investing in shares, on Figg, please read the following risk summary. Please 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 Figg and should balance this with safer, more liquid investments.

Risks when investing in equity or funds

Investing in shares (also known as equity) on Figg does not involve a regular return on your investment, unlike bonds 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 or tax relief

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 Figg – will pay you back your investment.

Tax relief may also be lost due to your personal circumstances or due to the activities of a company.

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 Figg cannot be sold easily and they are unlikely to be listed on a secondary trading market, such as AIM, Plus or the London Stock Exchange. Even successful companies rarely list shares on such an exchange. In addition, if you purchase B Investment Shares, these are non-voting shares and may not be attractive to potential buyers.

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 Figg 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.