Investor Education
Understanding Equity Crowdfunding Risks
A plain-English guide to key risks investors should understand before considering private company investments.
General information only
This article is for education and general information only. It does not constitute investment, financial, legal, tax or regulatory advice.
Equity crowdfunding can help companies access capital and give investors exposure to private businesses. It also carries meaningful risks. Investors should understand those risks before making any decision.
Capital loss
Private companies may fail, underperform or need further funding. Investors may lose part or all of their invested capital.
Illiquidity
Shares in private companies are usually difficult to sell. Investors should not assume they can exit quickly or at a preferred price.
Dilution
Future fundraising rounds may reduce an investor's percentage ownership if the investor does not participate in those rounds.
No guaranteed returns
Dividends, exits, buybacks and listings are not guaranteed. Any forward-looking information should be treated as uncertain.
Information limits
Investors should review available documents, ask questions and seek professional advice where appropriate. Website information is general information only and is not investment advice.