Any investment may not be suitable for all investors. The investments are intended for persons who can accept the risks associated with such investments, including a substantial or complete loss of their investment. As with any investment, Investing in seed or early-stage and other stage of start-up businesses as well as in real estate projects can be very rewarding, but it involves risks, particularly when investing in equity, bonds or Investment Funds. Therefore, there is not assurance that the Investments will achieve any returns and losses may be incurred. You have to be aware of and accept the following important considerations before you invest in businesses through Cumbrell.
Here, there are some of risks incurred when you invest:
Loss of Capital
The majority of start-up businesses fail or do not scale as planned and therefore investing in these businesses may involve significant risk. When you invest in a business displayed on the website, it is significantly more likely that you will lose all your invested capital and you will not get any return of capital or profit. You should only invest amounts that you are willing to lose and you should build a diversified portfolio to spread risk and increase the chance of an overall return on your investment capitals If the business you invested fails, neither the company, nor Cumbrell will pay you back your investment.
Illiquidity
Liquidity is the feature on which you can sell your shares or bond after you have purchased them. Any Investment, by its nature, is illiquid and will not be readily realisable. But almost all investments you make in equity or loan in start-up businesses or real estate projects displayed on the website will be highly illiquid, and they are unlikely to be listed on a trading market, such as any Market Stock Exchange. Even successful companies rarely list shares on such markets exchange. Also, if you purchase B Investment Shares, these are non-voting shares and may not be attractive to potential buyers. It means you will be unlikely to be able to sell your shares.
Dividends
Most of the start-up companies will rarely pay dividends to their investors because the profits are typically re-invested into the business to fuel growth and build value for the shareholders. It means that if you invest in a start-up business through Cumbrell, even if it is successful you are unlikely to get any return of capital or profit until you are able to sell your shares. However, businesses have no obligation to pay dividends.Even for successful companies, this is unlikely to occur for a number of years.
Dilution
Any investment made in shares may cause a equity (stock) dilution in the future. Dilution takes place when a company issues new shares selling them to new investors. In this way existing investors own a smaller part of equity (stock). These new shares may likely have certain preferential rights to dividends, sale proceeds and other matters, including voting and value, and it has an affect to your disadvantage. In additional, your shares may be subject to dilution as a result of the grant of options to employees, service providers or certain other contracts. Some businesses pitching for equity investment offering A-Ordinary Shares, which may include pre-emption rights that protect investors from dilution, giving them the opportunity to buy additional shares during a subsequent fundraising round. So, investors can maintain or preserve their shareholding. In general, most of companies do not offer pre-emption rights for B type Shares. Please be cautious and to check if the shares you are buying have these pre-emption rights.
Diversification
Every investment should only be made as part of a well-diversified portfolio, to let you reducing your risks. Remember, the majority of start-up businesses don't survive over 4 years. If you invest in start-up businesses, 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. Also, you should spread your investments between multiple businesses rather than investing a larger amount in just a few companies. Please be careful and cautious and careful, and remember that the most smart investors in the world fail more then 70% of the times. Also, in the case of Investment Funds, Investor’s Investments may be concentrated in as few as one Investment thereby increasing the risk profile of Cumbrell Ltd and substantially impacting on the amount returned to the Investor.
Target Returns
Any target returns are for illustrative purposes only and no forecast (guaranteed or otherwise) is implied or should be inferred. The Investment’s value may increase or decrease in contradiction with the predictions, and such loss of value may be total. As result, investors may not get back the full amount subscribed. Especially the Real Estate investments are speculative by nature. No assurance can be given that Cumbrell Ltd or any business project will generate returns or the returns will be commensurate with the risks of the specific investment made.
Investment Returns
The investment return of the Investment Funds is dependent upon the performance of the Loan and the payments made by the Borrower thereunder. Outside factors such as the economic climate, market conditions and changes in the legal or regulatory environment may all adversely impact payments under the Loan and therefore the performance of the Investment Funds. In such cases Investors risk a substantial or complete loss of investment.
Macroeconomic
Countries are in relationship with other countries, especially in UE, and some crisis in foreign countries or any macroeconomic changes may adversely affect on any investment or the ability of the Borrower to repay a Loan, which will consequently adversely affect returns.
Tax, Legal and Regulatory
Applicable taxation laws, legal framework and regulatory status, rules or regulations or the interpretation surrounding the Investment and/or Cumbrell Ltd or otherwise, may change, possibly with retrospective effec, and may adversely affect the Investor. Changes in the tax treatment of investments or other taxes may affect anticipated cash flows. Accordingly, the tax consequences of a particular investment or structure may change after the investment has been made. Any such change may have an adverse effect on any proceeds, returns or sums relating to the investments.
Team
The performance of the Investment Funds will depend in part upon the skill and expertise of the team of Cumbrell Ltd. The departure of any individuals or any internal problem could have a significant effect on the performance of the Investment Funds.
The discussion above about risks may be not intended to be exhaustive.
