To help you understand the risks of investing in stocks, please read the risk summary below. Be sure to be careful and diversify your investments.
Diversification means spreading your money across different types of investments with different risks to reduce your overall risk. However, it does not reduce all types of risk. Diversification is an essential component of investing. Investors should invest only a portion of their available capital through Upscalers and should balance it with safer, more liquid investments.
Investing in stocks on Upscalers does not imply a steady return on your investment. Please keep in mind the following specific risks of investing in stocks.
The majority of start-ups fail or do not develop as planned and therefore investing in such companies may involve a significant risk. It is possible that you may lose all or part of your investment. You should only invest an amount that you are willing to lose. In addition, you should build a diversified portfolio to spread the risk and increase the likelihood of an overall return on your investment. If a company you invest in goes bankrupt, neither the company - nor Upscalers - will return your investment. You may also lose tax benefits because of your personal circumstances or the company's operations.
Liquidity is the ease with which you can sell your shares after you buy them. Shares in companies launched through Upscalers are not easily sold and are unlikely to be listed on a secondary market, such as AIM, Plus or the London Stock Exchange. Even successful companies rarely trade their shares on such a market.
Dividends are payments made by a company to its shareholders from the company's profits. Most of the companies that raise money on Upscalers are start-ups or young companies, and these companies rarely pay dividends to their investors. This means that you are unlikely to see a return on your investment until you can sell your shares. Profits are generally reinvested in the business to fuel growth and create shareholder value. Companies are under no obligation to pay dividends to shareholders.
Any equity investment made through Upscalers may be subject to dilution in the future. Dilution occurs when a company issues more shares. Dilution affects each existing shareholder who does not purchase any of the newly issued shares. As a result, an existing shareholder's proportionate ownership in the company is reduced, or "diluted" - which affects a number of things, including voting, dividends and value.