I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me to seek advice from an authorized person who specializes in advising on non-readily realizable securities and non-mainstream pooled investments.
Warning, investing in unlisted companies involves specific risks:
- A risk of partial or total loss of capital with a possible default of the issuer
- A return on investment depending on the success of the financed project
- A liquidity risk: the resale of securities is not guaranteed and might be uncertain or impossible
EDSX does not guarantee your investment. A sound investment strategy consists in:
- diversifying your investments;
- investing a non-significative share of your savings;
- investing money that you will not need in the short term.
Investing in security tokens issued by the Company is associated with a certain degree of risk and it is not appropriate for individuals or entities who do not have the expertise to appraise and evaluate such an investment. Potential investors should carefully read and consider the information on the main specific risks related to a Company’s business activities, together with the information on the risks inherent to the offered security tokens prior to making a decision to purchase security tokens issued by a Company.
Potential investors are cautioned that any future operating results of a Company may differ materially from past results as a result of numerous factors, including the risk factors below. Each of the risks indicated here or in the Company’s documentation may, individually or jointly, have negative effects on the business, financial position, and future development of a Company, can affect negatively the price of security tokens of a Company and investors may lose some or all of the money they have invested.
- Loss of Capital. Most early-stage businesses, and many other businesses fail, and if you invest in a business displayed on the platform, it is significantly more likely that you will lose all of your invested capital than you will see any return of capital or a profit. You should not invest more money in the types of businesses displayed on the platform than you can afford to lose without altering your standard of living.
- Illiquidity. Almost all investments you make in businesses displayed on the platform will be highly illiquid. It is very unlikely that there will be a liquid secondary market for the securities of the investee entity. This means you should assume that you will be unlikely to be able to sell your shares until and unless the investee entity floats on a stock exchange or is bought by another company; and, even if the investee entity is bought by another company or floats, your investment may continue to be illiquid. Even for a successful business, a flotation or purchase is unlikely to occur for a number of years from the time you make your investment. For businesses for which secondary market opportunities are available, it can be difficult to find a buyer or seller, and investors should not assume that an early exit will be available just because a secondary market exists.
- Rarity of Dividends. Businesses of the type displayed on the platform rarely pay. This means that if you invest in a business through the platform, even if it is successful you are unlikely to see any return of capital or profit until you are able to sell your shares in the investee entity. Even for a successful business this is unlikely to occur for a number of years from the time you make your investment.
- Dilution. Any investment you make in a business displayed on the platform is likely to be subject to dilution. This means that if the business raises additional capital at a later date, it will issue new shares to the new investors, and the percentage of the investee entity that you own will decline. These new shares may also have certain preferential rights to dividends, sale proceeds and other matters, and the exercise of these rights may work to your disadvantage. Your investment may also be subject to dilution as a result of the grant of options (or similar rights to acquire shares) to employees of, service providers to or certain other parties connected with, the investee entity.
- Diversification. If you choose to invest in businesses of the type displayed on the platform, such investments should only be made as part of a well-diversified portfolio. This means that you should invest only a relatively small portion of your investable capital in such businesses, and the majority of your investable capital should be invested in safer, more liquid assets. It also means that you should spread your investment between multiple businesses rather than investing a larger amount in just a few.
- Investment performance. The past is not necessarily a guide to the future performance of an investment. The value of investments may fall as well as rise and investors may not get back the amount invested. Changes in rates of foreign exchange may cause the value of investments to go up or down.
- IT. The process of generating, transferring and owning tokens will not be prone to errors. The smart contract concept and the blockchain technology are in early stages of development and there is no guarantee that the process of generating, transferring and owning tokens will not be prone to errors. Furthermore, the software may contain weaknesses and vulnerabilities which may lead to loss or theft of equity capital participation tokens or other unforeseeable problems.
- Business specific risk. Risks inherent to the specific business of an issuer, non-exhaustive list: personnel, business fluctuation, market dependencies, supplier risk and bargaining power, clients bargaining power, risk of new entrants in the business and alternative products/services, risk of increasing competition in the related market, risk of new more efficient products/services, risk of business disruption and interruption, raw material price volatility, regulatory risk, macroeconomic risk, country risk, geopolitical risk and so on. Please consult also the issuer’s documentation.