While not quite comparable to a comet arriving from space, we have attempted to list the main risks associated with investing in venture capital investments below. Please remember that they are not suitable for all investors and those seeking to invest should seek advice from an independent financial adviser and may also require the expertise of a taxation expert.
- Past performance should not be regarded as a guide to future performance.
- These should be regarded as high risk investments. Investors may lose part or all of their investment.
- Monitoring equity performance is intrinsically difficult with unlisted investments and is reliant on information provided by the scheme manager.
- Investments in shares in unquoted companies are not necessarily liquid i.e there isn’t an established secondary market. Even where there is, as in the case of some compliant AIM listed shares, this may change. Investors should therefore expect a higher degree of risk than investments in larger companies that are listed on an main stock exchange.
- Where a fund is available, diversification across many industrial sectors may be limited. It may not be possible to find a sufficient number of investible opportunities. Certain types of company may not be compliant with scheme rules in any event that cover sectors such as real estate and finance.
- Investors are more heavily reliant on the performance of key personnel and either the fund manager or the investee company directors that one would expect at larger established companies.
- The levels of tax relief incentives and the rules of the venture capital schemes regarding compliance are subject to change and have done so in the past. They are not guaranteed.
- The level of tax relief you receive will be dependent on your own individual circumstances, which may change.
- The timing on which all the separate reliefs available to venture capital schemes are granted will vary depending on the date on which the qualifying investments are made.