Risks

Disclaimer concerning the risks of investments through PRE-IPO

This document provides essential information for Investors concerning investments made through PRE-IPO. The information that it contains has been provided to you in order to help you understand what an investment through PRE-IPO consists of and what risks are associated with such investments. We advise you to read this document carefully in order to make an informed decision whether to invest or not.

Preamble

Investing in unlisted companies can lead to significant capital gains. However, such investments should also be considered in the light of a few elementary rules:

  • Never invest more than 5% to 10% of your net worth.**
  • As the activities of PRE-IPO are subject to the inherent risks of risk capital investment, no guarantee can be given against losses resulting from an investment made through PRE-IPO and there is no guarantee that Investors will recover their initial investment.
  • Diversify your investments between different companies operating in different sector.**
  • The proposed companies base their development plans on the implementation of a concept, products, strategy or new commercial approach that will be subject to numerous uncertainties. These companies generally have more limited financial resources than more established companies and are consequently more vulnerable to changes in economic conditions.
  • Never invest money that you might need over the short or medium term.**
  • The IPO of a company, even if scheduled, is never guaranteed and liquidity could only develop over the long term, with no guarantee as to how long this will take.
  • Invest only in companies where you understand the sector, the business model, the financial elements and the terms of the operation.
  • Before any subscription to financial securities, we recommend that you consult all the information relating to the operation and company, notably the “Risk Factors” section of the information document available on the company overview page, which notes the general risk factors and specific risk factors of the company.
  • Before any investment, you should assure yourself that you have full understanding of the advantages and potential risks of the investment, that your decision has been taken independently and that the operation is appropriate for you given your objectives, experience, operational and financial resources and other relevant circumstances.

Investing can be very profitable. However, it also involves a certain number of risks. If you choose to invest through PRE-IPO, you should understand and accept the following four important points.

Recommendation: do not rush into placement decisions and never sign documents without have first read them closely. It is notably recommended that subscribers contact the PRE-IPO teams if they wish to obtain further details, notably concerning the characteristics of the investment under consideration and the specific risks relating to this investment.

1. Capital loss

The prospective returns from an equity investment in unlisted companies are necessarily accompanied by a high risk of a total or partial loss of the sums invested.

This loss could be linked to the bankruptcy of the company in case of failure of its project or a lack of future financing. However, even if the company does not fail, a partial loss can result from lower than expected results in the future.

Investments in company bonds also feature a risk of loss of invested capital in case of a lack of liquidity at maturity or bankruptcy of the company.

Recommendation:

  •  you should assure yourself prior to investing that you have sufficient financial resources to bear the risk of capital loss. Invest only the amount of money that you can afford to lose. The placement is not a way to get rich quickly or a game of chance.
  • diversify your investment portfolio by investing relatively small amounts in several different companies.

2. Lack of liquidity

A lack of liquidity corresponds in reality to difficulty in selling or trading the securities subscribed to.

Whether the company is listed or unlisted, there is no guarantee as to the liquidity of the investment:

By way of example, for an unlisted company: 

Certain statutory and/or extra-statutory clauses in the operations presented can lead to potential restrictions on the negotiability of shares and limit the possibility of selling shares of the company – The shareholders of the company can be unable to find a purchaser of their stake

By way of example, for a listed company:

The historical shareholders can be required to maintain their holdings for a defined period following the date of the IPO – Volumes can be insufficient at the current share price to assure a counterparty for a sell order.

Consequently, Investors having subscribed to shares through PRE-IPO cannot count on a short-term exit. These constraints apply even to highly successful companies.

Recommendation: you should assure yourself that you can tie up the amounts invested over a long-term horizon without any set limit. Do not invest if you wish to have access to your money rapidly.

3. Scarcity of dividends

Certain companies could rarely or never pay dividends because their shareholders would prefer that money be reinvested in the company.

Recommendation: the companies proposing to raise funds through PRE-IPO will not always be in a position to pay dividends. These investments are not adapted to Investors seeking to obtain recurring revenues derived from their investments, as these revenues can fluctuate or even be non-existent.

4. Dilution

Any investment realised through the platform could be subject to dilution. In other words, if the company raises additional funds at a later date through the issue of new shares subscribed to by new Investors, the percentage stake in the issuing company held by Investors who do not subscribe to this capital increase will fall.