What are the risks of investing in equity crowdfunding?

Investing in an early-stage business is risky as there’s no promise of a return on your investment. You may even lose your investment entirely - it’s common for start-ups to fold given the highly competitive Australian business landscape. So, for that reason, do not invest more than you are willing to lose.

Alternatively, the business may gain traction and build momentum, but your investment is still illiquid. Although the business is succeeding there may not be a pressing exit event and the company may choose to do follow on capital raises. You may not be able to cash in your shares for capital for a long time. So, for that reason, do not invest more than you are willing to lose.

 

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