To help you understand the risks involved when investing in businesses on Funder, please review the non-comprehensive list of risks summarized below. This risk warning should not be regarded as investment advice or guidance. Its purpose is simply to remind you of the risks associated with investing, particularly in equity. If you are new to investing, seek advice from a licensed investment consultant or other qualified professionals, or consider more extensive training before committing funds.

Diversification involves spreading your money across multiple investments to help reduce risk. While diversification is an essential principle of investing, it cannot eliminate all types of risk.

You should only invest a proportion of your available funds through Funder and balance this with safer, more liquid investments.

Investing in shares of a non-listed public or private limited company (equity) through Funder does not guarantee regular returns.

Please ensure you understand and acknowledge the following risks associated with equity investments:

1. Due diligence

Funder does not conduct legal, financial, tax, or other due diligence on businesses seeking to raise capital. Information provided on the platform may be incomplete or may not fully describe all risks related to the company. If you require a deeper assessment before making an investment decision, you must allocate time and resources to conduct independent due diligence. Funder is not responsible for the accuracy or completeness of information shared by the business.

2. Loss of investment

Many start-ups and early-stage businesses fail or underperform. Therefore, investing in these businesses involves significant risk, including the possibility of losing all or part of your investment. Only invest funds you are prepared to lose, and build a diversified portfolio to manage risk. If a business you invest in fails, neither the company nor Funder will reimburse your investment.

3. Lack of liquidity

Liquidity refers to how easily you can sell your shares after purchase. Shares in small or early-stage businesses are often illiquid and may be difficult to sell. If you hold only a small percentage of shares, you may have little influence over company decisions, making your shares less attractive to future buyers. Additionally, all shares offered through campaigns are subject to pre-emption rights, meaning existing shareholders have the right to purchase them before external buyers. This may increase transaction costs for you and potential buyers, and in some cases, buyers may require you to cover these costs.

4. Dividends are not guaranteed

Dividends are distributions of company profits to shareholders, decided at the shareholders’ meeting. Businesses are not obligated to pay dividends. Start-ups and early-stage companies on Funder rarely pay dividends, as they typically reinvest profits into growth. As a result, you are unlikely to see a return until you sell your shares.

5. Dilution

Any investment through Funder may be subject to dilution if a company issues new shares. Dilution reduces your proportional shareholding and may affect voting power, dividend entitlement, and the value of your shares.

Companies typically provide pre-emption rights, giving existing investors the opportunity to purchase additional shares during new funding rounds. However, these rights can be waived by shareholder decision.

6. Drag-along obligations

Some shareholder agreements include drag-along clauses. This means you may be contractually required to sell your shares if the majority of shareholders agree to a sale, even if you do not wish to sell. Please carefully review any shareholder agreement before investing to understand whether such obligations apply.