Don't invest unless you're prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong.
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Risk Summary

Estimated reading time: 2 min

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

  • You could lose all the money you invest
  • Most investments are shares in start-up businesses or bonds issued by them. Investors in these shares or bonds often lose 100% of the money they invested, as most start-up businesses fail.
  • Checks on the businesses you are investing in, such as how well they are expected to perform, may not have been carried out by the platform you are investing through. You should do your own research before investing.

You won't get your money back quickly

  • Even if the business you invest in is successful, it will likely take several years to get your money back.
  • The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
  • Start-up businesses very rarely pay you back through dividends. You should not expect to get your money back this way.
  • Some platforms may give you the opportunity to sell your investment early through a 'secondary market' or 'bulletin board', but there is no guarantee you will find a buyer at the price you are willing to sell.

Don't put all your eggs in one basket

  • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well. A good rule of thumb is not to invest more than 10% of your money in high-risk investments. Learn more here.

The value of your investment can be reduced

  • If your investment is shares, the percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
  • These new shares could have additional rights that your shares don't have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

You are unlikely to be protected if something goes wrong

  • Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker.
  • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated platform, FOS may be able to consider it. Learn more about FOS protection here.

If you are interested in learning more about how to protect yourself, visit the FCA's website here.

For further information about investment-based crowdfunding, visit the crowdfunding section of the FCA's website here.
Insights
Raising Capital
Craig Peterson
· 3 min read
· Updated on

Scaling up a business: the talent behind business growth

Scaling up an early stage business and raising capital can be daunting. The preparation and strategic overview that goes with this type of growth plan can take a considerable amount of time and planning.

One of the biggest factors considered when raising capital is to incorporate a strategic plan around recruitment and talent management.

When pitching to investors, they undoubtedly want to see the drivers behind the business; the people and the skills that are going to make that business a success and empower growth.

It's well documented that we're facing a talent shortage here in the UK, and it's been reported scale-ups create jobs at three times the rate those businesses in the FTSE 100 do. As such, this leaves them more exposed to increasing skills shortages.

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What skills are important to business growth?

Finding a team that has sector experience can prove to be vital - but a mix of sector experience alongside professional experience is the ideal mix. An early stage business scaling up needs a team of people who can add value across many areas, ideally with an entrepreneurial approach to strive to make the business a success.

Defining the role to recruit is a hard decision

One of the toughest staffing issues when scaling up is knowing which roles to recruit for first. More often than not there are multiple options, which clearly presents a difficult decision - most companies, not just early stage businesses, don't have the luxury of hiring for every possible role in the business at once!

What's more, hiring the wrong roles can be expensive and time consuming, so prioritising growth and stability is a must.

I personally have a rule: if a possible new role cannot double their salary and overheads through billable projects or new clients, it's not generally viable to consider that role a crucial part of the growth plan at this stage.

Millennials bring a new set of skills

It's expected that by 2025, 75% of the global workforce will be made up by millenials. As such, a new set of skills and characteristics - essential to future-proofing any business - are being introduced. For this reason, Millennials are key to unlocking growth through technical innovation and knowledge.

Attracting this talent is clearly crucial. However, with this new set of skills comes a level of expectation that doesn’t always fit with traditional employee incentive structures. While millennials bring new skills and a fresh perspective, the experience and wisdom of the older generation is essential to building the foundations needed to scale-up securely.

A business that can attract both generations - and succeed in uniting that workforce under a shared corporate vision and purpose - will go a long way to equipping itself with the talent and skills it needs to thrive.

But how do we retain those teams needed to grow the business?

Retaining and developing a skilled workforce is fundamental to the success and growth of any business, but more so an early stage business.

Talent management focuses on an employer’s commitment to recruit, retain and develop those employees showcasing their talent and potential. It’s about selecting the right people and developing their potential and fuelling their enthusiasm, passion and ability, thus building their commitment to your organisation.

Engaging your workforce is a key process - recognising how a more engaged and focused workforce increases their value to the company when their skills, knowledge and creativity is being applied more effectively. It allows people to practice what they do better, and software can help assess how engaged your workforce are.

A prime example is Hive.HR, a company who have raised capital seed stage funding through GrowthFunders. They have changed the way employee engagement is assessed, as the product is built to send out a short, weekly survey, replacing the traditional yearly survey that becomes outdated very quickly.

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Businesses aim to give more attention and action to both of these areas. However, it’s about how well these areas are developed and maintained, too.

Take time, plan wisely and encompass your strategic aims

Get the very best people, who fit with the vision and culture of the company, then invest in the very best training you can afford. As a business owner, you’ve also got to be self-aware enough to know your limits and recognise when it’s time to bring in people with more expertise than yourself.

Business Rule No 1 is people are key to how successful your business becomes. Set your goals, then work out who and what is needed to achieve them.

Recruiting doesn't need to be overwhelming. In a nutshell, it's about planning and dedicating time and finance to ensure your key hires are the right people for your business.

Get this right, and you'll be doing a lot to pave way for your future successes.

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