If you invest in a business on Crowdcube you will become a shareholder in that company. In most cases your shares will be held on for you by Crowdcube Nominees Limited. [Have a read of our guide about what the nominee is and does here.] The amount you invest, and the equity issued/number of shares bought will affect your percentage of ownership in the business. Once your investment has been processed and Crowdcube have collected your payment you will be sent your share documentation.
Most investments are for Ordinary Shares held by Crowdcube Nominees and you will have voting and pre-emption rights on those shares. However, you should check the share class on the pitch as this may vary from time to time.
Investing in startup and early stage businesses is high risk. The majority of startups fail or do not deliver shareholders a return on their investment. Liquidity, or the ability to cash in your investment, is limited as it often relies on the company being sold. Such investments in start up and early stage companies are long-term investments. Dividend payments are rare and the likelihood of an investor’s percentage shareholding being diluted by future fundraising is high.
Investors should therefore implement a diversification strategy when building an investment portfolio. Diversification involves spreading your money across multiple investments and will give you, as an investor, greater peace of mind that your investments will be sustained in adverse market conditions, and losses will be cushioned. However, it will not lessen all types of risk.