Investing in startups and early stage businesses can be very rewarding, but it involves a number of risks and challenges. If you choose to invest through BnkToTheFuture.com, you need to be aware of and accept five important considerations.
The following list of risk factors does not purport to be a complete enumeration or explanation of the risks involved in investing in any of the companies pitching for investment via the BnkToTheFuture.com website. Each individual company will be different and specific risks will attach to that investment. Prospective investors should review the individual companies’ pitches in their entirety and consult with their own advisers before making any decision to invest.
Any investment you make through the platform will be highly illiquid. While secondary markets may exist, there is no highly liquid secondary market for the shares of the investee company. This means that you are unlikely to be able to sell your shares until and unless the investee company floats on a securities exchange or is bought by another company. Even for a successful business, a flotation or purchase is unlikely to occur for a number a years from the time you make your investment.
Investing in startups should only be done as part of a diversified portfolio. This means that you should invest relatively small amounts in multiple businesses rather than a lot in one or two businesses. It also means that you should invest only a small proportion of your investable capital in startups as an asset class, with the majority of your investable capital invested in safer, more liquid assets.
3. Rarity of Dividends
Startups and early stage businesses 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 in the investee company. Even for a successful business, this is unlikely to occur for a number of years from the time you make your investment.
Any investment you make through 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 of the investee company to the new investors, and the percentage of the investee company that you own will decline. 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 parties connected with, the investee company.
5. Loss of Capital
Most startups fail, and if you invest in a business through the platform, it is more likely that you will lose all of your invested capital than that you will see a return of capital or a profit. You should not invest more money through the platform than you can afford to lose without altering your standard of living.
6. Indirect investment via a SPV
You should read all the offering materials available to you regarding the pitch (“Offering Materials”) with respect to a transaction prior to making an investment of any type. You should also understand that investments through BnkToTheFuture.com may be direct or indirect investments to the underlying pitch as described more fully in the Offering Materials.
Secondary Market Warnings
THERE IS NO PROMISE OF A SECONDARY MARKET AND ALL INVESTMENTS IN PRIVATE PLACEMENTS ARE REQUIRED TO BE HELD FOR AT LEAST ONE YEAR, BUT SHOULD SUCH A SECONDARY MARKET EXIST IN THE FUTURE AFTER THE ONE YEAR HOLDING PERIOD IT IS IMPORTANT TO UNDERSTAND THE ADDITIONAL RISKS MAY APPLY.
References to “our secondary market” on the platform refer to the facility made available to Investor Members on the BF platform to facilitate the transfer of existing investments between Investor Members.
Securities can be subject to restrictions on trading (Please refer to investment documents on pitch for details)
1. Incomplete Information
Directors of the underlying companies often have more information than shareholders. Employees may know things that you do not know about the company. Existing investors that you may be purchasing these shares from most likely have more information about the history and status of the underlying company than you. New investors will have the least Information and therefore take the most risk.
When purchasing shares through a SPV model you are subject to greater risks than direct shareholders due to a lack of Information about the underlying company owned by the SPV. You may be buying shares from a director, employee or shareholder who may have significantly more information than you that may lead to the complete loss of your investment capital as they are not subject to the same disclosure and reporting rules of a publicly traded company.
2. Indirect investor
You are not buying direct shares in the company listed. The shares will be owned by a Special Purpose Vehicle (SPV) held and operated by Bnk To The Future Capital SPC and Bnk To The Future. A more comprehensive understanding of the structure is disclosed below and should be read and understood before investing.
3. Information Rights
As a SPV shareholder you do not have Information or voting rights in the underlying companies. While we will do all we can to represent shareholder interests and exercise any voting or information rights we may have, you will not have any right to vote or request further company Information.
4. No Voting Rights
All shares on our secondary market come with no voting rights unless otherwise stated. if you purchase shares on our secondary market, these are non-voting shares and may not be attractive to potential buyers. When listing your shares on our secondary market you may lose any right to vote you may have previously held and you should read the terms carefully.
Platform Risks & Disclosures
BnkToTheFuture.com is targeted exclusively at investors who are sufficiently sophisticated to understand these risks and make their own investment decisions. You will only be able to invest via BnkToTheFuture.com once you are registered as an appropriately accredited or sophisticated investor (‘Qualifying investor’ or ‘Member’). Investments may lose value, there are no guarantees, securities and investments are not FDIC Insured and neither Bnk To The Future, its affiliated companies, nor our affiliated broker-dealer BMI Capital offer investment, legal or tax advice.
Other activities may involve engagements with Bnk To The Future Capital SPC (company number 298427) Incorporated and registered in Cayman Islands under the Companies Law 2013 and other affiliated companies depending on your country of residence including BMI Capital International LLC and other regulated companies.
US residents agree to register with BMI Capital International LLC, a registered US broker-dealer with FINRA and member of SIPC, who operate sections of BnkToTheFuture.com where Regulation D offerings filed with the SEC are conducted. Activities with respect to US resident investors are conducted by BMI Capital International LLC. Registration does not imply a certain level of skill or training. Individuals and firms may only transact business in a jurisdiction after satisfying its licensing and qualification requirements or after being excluded or exempted.
Registration does not imply a certain level of skill or training. Individuals and firms may only invest in compliance with the relevant regulations applicable in their jurisdictions.
Pitches for investment are not offers to the public and investments can only be made by members of BnkToTheFuture.com on the basis of information provided in the pitches by the companies concerned.
Bnk To The Future is registered as an excluded securities business with the Cayman Islands Monetary Authority (CIMA No.1189274). This website is owned and operated by Bnk To The Future (company number 296093) Incorporated and registered in Cayman Islands under the Companies Law 2013.