Risk Warning

Last updated: November 2017

Risk Warning

Investment in early stage companies, with limited operating history, involves a number of risks and challenges. Should you choose to invest in businesses shown on ExitValley, you should be aware of and understand  the following considerations;

1. Loss of capital

The value of investment may go down as well as up.  Your capital is a risk.  The majority of early-stage businesses and many other businesses fail, and if you invest in a business displayed on ExitValley, it is 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.

2. Illiquidity

Most of the investments you make in businesses displayed on our website will be highly illiquid. It is very unlikely that there will be a liquid secondary market for the shares of the business. This means you should assume that once you have committed your money, it may be difficult for you to liquidate your investment and get your money back at a time that suits you. You will be unlikely to be able to sell your shares until and unless the business floats on a stock exchange or is bought by another company; and, even if the business 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.  Share prices may be subject to fluctuation but investors should not assume that an early exit will be possible in the secondary market.  

3. Rarity of Dividends

Businesses of the type displayed on ExitValley rarely pay dividends. 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. Should a business be successful, this is unlikely to occur for a number of years from the time you make your investment.

4. 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 business that you own will decrease. 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 contacts of, the company.

5. Diversification

If you choose to invest in businesses of the type displayed on ExitValley, such investments should only be made as part of a diversified portfolio. This means that you should invest only a relatively small portion of your investible capital in such businesses, and the majority of your investible 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.

6. Dependence on Directors

The success of the companies shown on ExitValley will depend in part upon the ability of their directors to build and maintain a strategy that achieves the company's investment objectives.

7. Tax Treatment of Shares

You must ensure that you are aware of your tax obligations or any related risks that might apply to you as a result of any investments made on ExitValley.  The tax treatment of schemes such as EIS and SEIS depends on the individual circumstances of each client/investor and may be subject to change in future. Therefore Tax reliefs are not guaranteed.
We encourage you to consult with appropriately qualified tax professionals regarding your tax circumstances.

8. Past and Future Performance

Asset and investment values may go down as or up and there are various reasons why the asset or investment may decrease. Past performance is not a reliable indicator of future valuations or income streams. Any future downturn in the market generally or changes to the fundamental condition or impairment of an asset or investment specifically such as relative value, performance, the acts or omissions of management, geo-political impacts, etc. could have an adverse effect on the value of any investments you make, meaning that you would receive lower returns than you expected or potentially no returns at all.  You should make sure you have considered the risk from the outset. 

9. Control

By making an investment on ExitValley, you acknowledge that you are making a long term investment. You will not have control over the day-to-day decisions made in relation to a particular investment or timing of your exit.

10. Unexpected Disposal

There may be instances and certain circumstances whereby the underlying asset in which you made and investment is sold, resulting in a return of net proceeds to all investors.
Notice will be given should such circumstances arise. However, this may happen at a time which you do not consider ideal and you may receive back much less than you initially invested. Any taxable income may also crystallise sooner than expected.

11. Adverse Changes to Exchange Rates

You should consider the risk of losses that may arise from currency fluctuations between this and your own functional currency throughout the duration of your investment

12. Absence of Financial Services Compensation Scheme (FSCS) Cover

Your investment is not covered by the UK’s FSCS arrangements, nor any other statutory or voluntary compensation scheme
This list of risk factors gives a summary of key risk.  It does not purport to be a complete enumeration or explanation of the all risks involved in a particular investment. Prospective investors should read the relevant ExitValley’s investee companies' pitch documents in their entirety and consult with their own advisers before deciding whether to invest.

The financing rounds, made through the ExitValley platform, are in accordance with a model of statutory exemption from publishing a prospectus pursuant to sections 15A(A)(1) and 15A(A)(7) of the Israeli Securities Law - 1968.
Under this model, the disclosure of detailed information on the company and information about the investment in each round of financing are limited to not more than 35 investors, who are not qualified investors, and the round of financing is not in the format of an offering arrangement ("רכז הצעה"), as defined in the Securities Law.
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