To help you understand the risks involved when investing in shares on The Right X website (“The Right X Platform”) (which is a trading name of The Right Crowd (https://www.therightcrowd.com), please read the following risk summary. Please invest aware and diversify your investments. If you are in any doubt about making an investment you should obtain advice from a suitably qualified and regulated financial advisor.
The Need for Diversification When You Invest
Diversification involves spreading your investable funds across multiple investments and investment classes to reduce risk. However, it will not lessen all types of risk. Diversification is an essential part of investing. Investors should only invest a proportion, dependent in size on your risk appetite, of their available investment funds via The Right X Platform and should balance this with safer, more liquid investments.
Risks When Investing in Equity or Bonds
Investing in shares (also known as equity) on The Right X Platform does not involve a regular return on your investment unlike bank deposits or debt instruments which offer interest paid regularly. Please bear in mind the following particular risks for equity investments:
Loss of Investment
The majority of start-up businesses fail or do not develop as planned and therefore investing in these businesses involves significant risk. It is possible you may lose all, or part, of your investment. You should only invest an amount you can afford 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 The Right X Platform – will pay you back your investment. The investments listed on the Right X platform do not qualify for the Financial Services Compensation Scheme (FSCS) nor would you have access to the Financial Ombudsman Service (FOS).
Lack of Liquidity
Liquidity is the ease with which you can sell your shares after you have purchased them. Shares in businesses listed on The Right X Platform cannot be sold easily and they are unlikely to be listed on a secondary trading market, such as AIM or the London Stock Exchange. You may not therefore be able to sell your shares until the company lists on an exchange or becomes sufficiently successful enough to increase liquidity in its shares.
Rarity of Dividends
Dividends are payments made by a business to its shareholders from the company’s profits. Most of the companies listed on The Right X Platform website are start-ups or early stage companies, and these companies will rarely pay dividends to their investors. Profits are typically re-invested into the business to fuel growth and build shareholder value. This means that you are unlikely to see a return on your investment until you are able to sell your shares or until the company is successful and starts paying dividends. Businesses have no obligation to pay shareholder dividends.
Any investment in shares through The Right Crowd X may be subject to dilution in the future. Dilution occurs when a company issues more shares thus reducing the percentage of the company you previously owned. Dilution affects every existing shareholder who does not buy any of the new shares being issued and can have an effect on a number of things, including voting, dividends and value.
The Right X platform does not provide you with any advice or, by listing a company on the platform, make any recommendations in respect of any company listed on the platform. You have, by becoming a member of the platform, acknowledged you have sufficient experience to make your own investment decisions or will only invest up to 10% of your total investment funds in high-risk investments. If you are in any doubt about making an investment on The Right X platform you should seek independent financial advice from a person regulated to do so.