Important information about fund and convertible campaigns
The platform provides opportunities to invest in startup and growth-focussed businesses by way of three types of campaigns: equity, fund and convertible. Information about these campaigns is available here. All the risk warnings above apply to each of the three types of campaigns but you should also be aware of the following in respect of funds and convertibles. As each fund and convertible campaign is different, please ensure you read the campaign text and accompanying documentation carefully.
Funds
Fund campaigns allow you to invest in multiple companies that are selected by predetermined criteria, and are often set up by a fund organiser (who may run an accelerator or venture capital fund, for example). Whilst each investment in a company will be structurally the same as a regular equity campaign, your money will be invested company-by-company over a longer period, meaning that your shares in each company will be issued at different times.
Convertibles
Convertible campaigns allow you to invest in a business in return for a contractual right for shares to be issued on the occurrence of a trigger event (generally another round of funding or a longstop date). In return for investing early, you will receive a discount on the price of the shares issued, and sometimes the benefit of a valuation cap. Whilst the investment in the company will be structurally the same as a regular equity campaign, your shares will be issued later than your money is invested.
Future Fund Convertibles
Future Fund convertible campaigns allow you to invest in businesses that are intending to apply to the Government backed Future Fund. Investment in these campaigns must be on the convertible loan terms prescribed by the Government and you should be aware that these terms differ to our normal convertible campaigns. The convertible loan agreement prescribed by the Future Fund is equity focused and favours conversion of your investment into equity in the business as the default position. However, there are certain events where your investment does not convert into equity and instead may be repaid by the company, with a redemption premium. Before investing, you must read and accept the key terms of the campaign. In addition to the above, you also need to be aware and accept the following risks:
There is no guarantee that the business will be successful in its application to receive the Future Fund matched funding. The campaign will specify whether your investment into the business is conditional on a successful application of the Government’s matched funding.
Any interest due will be paid at a fixed rate rather than by reference to an underlying index. Accordingly you should note that a rise in interest rates may adversely affect the relative returns that the convertible loan offers. Inflation may reduce the real value of any returns over time.
The business may not have sufficient funds to repay the loan on maturity, pay interest when it becomes due or pay the redemption premium included in the terms. It is likely that you will lose all of your invested capital and you should not invest more money than you can afford to lose without altering your standard of living.
Convertible loans are unsecured obligations and in the event that the business fails, your investment will be ranked behind secured creditors of the business. This means that if the business fails, it is unlikely that you will have your initial investment or outstanding interest payments returned to you because there is no security over any remaining assets.
The convertible loan agreement is intended as bridge funding to a future funding round, but there is no guarantee that the business will be able to secure further funding.
Important information about AutoInvest
AutoInvest enables you to automatically invest in regular equity campaigns that meet certain criteria selected by you. Once you opt in to autoinvest, investments will be made into campaigns that meet the criteria without you needing to select individual campaigns, but each investment will be structurally the same as if you had invested into the campaigns individually. You are able to activate and pause AutoInvest at any time, and you will have a period of seven days to cancel an investment made by AutoInvest.