Capital at riskInvest Wisely!

To help you understand the risks involved when investing in startup business; EquityDebtProfit Share, and or Convertible Note here at Gee Funding, Inc., please read the following risk summary.  Invest wisely and diversify your investments. 

The need for diversification when you invest

Diversification involves spreading your money across different types of investments with different risks to reduce your overall risk. However, it will not lessen all types of risk. Diversification is an essential part of investing. Investors should only invest a proportion of their available investment funds via GeeFunding portal and should balance this with safer, more liquid investments.  

Risks when investing in equity or funds

Investing in shares (also known as equity) on GeeFunding does not involve a regular return on your investment.  Investing in a fund may help to diversify your investments and to spread the risk but general risks while investing in equity continue to apply.

There is no ready market for the sale of the securities acquired from offering and it may be difficult or impossible for an investor to sell or otherwise dispose of his investment.

An investor may be required to hold and bear the financial risks of his investment indefinitely; The securities have not been registered under federal or state securities laws and, therefore, cannot be resold unless the securities are registered or qualify for an exemption from registration under federal and state law; In making an investment decision, investors must rely on their own examination of the issuer and the terms of the offering, including the merits and risks involved; and No federal or state securities commission or regulatory authority has confirmed the accuracy or determined the adequacy of the Disclosure Statement or any other information on GeeFunding.com

Please bear in mind the following particular risks for equity and fund investments:

Loss of investment

The majority of start-up businesses fail or do not scale as planned and therefore investing in these businesses may involve significant risk.  It is likely that you may lose all, or part, of your investment.  You should only invest an amount that you are willing to lose and should build a diversified portfolio to spread risk and increase the chance of an overall return on your investment capital. If a business you invest in fails, neither the company – nor Gee Funding – will pay you back your investment.

Lack of liquidity

Liquidity is the ease with which you can sell your investments to a third party after you have purchased them. Investments in Start-up business through GeeFunding should be viewed as a long term and liquid investment. Buying shares in businesses pitch through GeeFunding cannot be sold easily and they are unlikely to be listed on a security trading market like NY Stock Exchange. Even successful companies rarely list shares on such an exchange.

Rarity of dividends

Dividends are payments made by a business to its shareholders from the company’s profits.  Most of the companies pitching for equity on the GeeFunding portal are start-ups or early stage companies, and these companies will rarely pay dividends to their investors. This means that you are unlikely to see a return on your investment until you are able to sell your shares.  Profits are typically re-invested into the business to fuel growth and build shareholder value. Businesses have no obligation to pay shareholder dividends.

Dilution

Any investment in shares made through Gee Funding portal may be subject to dilution in the future. Dilution occurs when a company issues more shares. Dilution affects every existing shareholder who does not buy any of the new shares being issued. As a result, an existing shareholder's proportionate shareholding of the company is reduced, or ‘diluted’-this has an effect on a number of things, including voting, dividends and value.

Some businesses who pitch for equity investment through GeeFunding offer A-Ordinary Shares, which may include pre-emption rights that protect an investor from dilution.  In this situation the business must give shareholders with A-Ordinary Shares the opportunity to buy additional shares during a subsequent fundraising round so that they can maintain or preserve their shareholding. Please check a pitch, and the Articles of the company to see if the shares you are buying will have these pre-emption rights. Most companies do not offer pre-emption rights for B Investment Shares.

Risks when investing in Mini-bonds

Mini-bonds are a very different kind of investment to equity and you do not own a stake in the business issuing the mini-bond.  Instead you receive regular interest payments from the issuing company (the “Issuer”) and then return your initial investment back at the end of the mini-bonds term (the maturity).   Before investing, you must read and agree to the Bond Instrument for each mini-bond as these contain the exact terms and conditions, including the interest payments and final repayment time between investors and the company raising the money.  It is important to understand that Issuers are solely responsible for their financial status and consequently their ability to pay interest and return investors’ capital when the mini-bonds mature. GeeFunding does not issue the mini-bonds listed on the GeeFunding platform and is not responsible for their performance.  Mini-bonds represent a high degree of risk and you should be aware of some of the specific risks involved in investing in them.

Loss of investment and interest payments

Issuers, like all businesses, are vulnerable to financial difficultly and investing in mini-bonds may involve significant risk of default. In the event of an Issuer being unable or unwilling to meet payments of interest and capital, it is likely that you may lose all, or part, of your initial investment and receive no outstanding or future interest payments. 

If a business you invest in fails, neither the company you invest in – nor Gee Funding, Inc – will pay you back your investment. You should only invest an amount that you are willing to lose and should build a diversified portfolio to spread risk.

Restricted redemption rights

Issuers of the shares/equity set the terms for redeeming your capital. Investors should be aware that they will not be able to redeem their initial investment under any circumstances other than those set out in the terms and conditions of the documentation of an individual start-up business funding campaign, meaning their capital will be locked up for the entire term of the investment, should therefore be viewed as a long term and liquid investment.

Unsecured investment

Unless otherwise set out in the Bond Instrument, mini-bonds are typically an unsecured obligation of the Issuer, meaning there is no security over the property or assets of the Issuer supporting the repayment of your interest or capital.  This means that if an Issuer fails, it is unlikely that an investor will have their initial investment or outstanding interest payments returned to them because there is no security over any remaining assets. 

Early Call Risk

The Issuer has the right to repay you your money at any time prior to the formal repayment date. Your investment may be materially curtailed because of this.

Voting Rights, if any

It's rare for a Regulation Crowd Funding (Reg. CF) investment to offer voting rights directly to investors. All investors participating in investment oppotunities listed at Gee Funding should assume their investment does not include voting rights unless specified otherwise in the issuer funding campaign.

 

Lower in the pecking order on winding up

 

If an Issuer falls into financial difficulty and goes out of business, other creditors and debt holders with seniority – including fixed charge holders, administrators, employees who are owed wages, banks, and secured debtors - will be compensated first. This means it is unlikely mini-bond investors, whose unsecured investment sits below all of the previously mentioned in the pecking order, will have their initial investment or outstanding interest payments returned to them after higher ranked creditors are compensated. 

 

Interest rate and inflation risks

 

Mini-bonds pay interest at a fixed rate rather than by reference to an underlying index. Accordingly, you should note that a rise in interest rates may adversely affect the relative returns that mini-bonds offer. Further, inflation may reduce the real value of the returns over time.

 

Gee Funding Does Not Provide Investment or Legal Advice

You understand that we will not give you any advice or recommendations about whether a crowdfunded security or other investment is appropriate or suitable for you. Decisions to buy, sell, or hold any investment rest solely with you, an authorized person, and any Advisor to you, if applicable. We exercise no discretion over your account(s) and make no investment decisions for you. 
 
By making information available to you on Gee Funding platform, we are not recommending or advising that you invest in any particular offering or security, or use any investment strategy. Information on GeeFunding.com is not personalized to fit your needs, reflect your financial circumstances or investment objectives, (unless we tell you otherwise). The securities or investments discussed on Gee Funding might not be suitable for you. You alone determine that. 
 
All investments entail risks, and you are responsible for determining whether you can afford the risks of using our tools or making any investment. Specifically, we do not review your financial situation or tolerance for risk. Although we may provide information that helps you to assess your own tolerance for risk, or otherwise assist you and seek to educate you in various ways, we do not determine if the information or tools we provide to view or select investments or otherwise assist or seek to educate you will result in suitable or profitable investments for you. 
 
We strongly recommend you seek independent financial, tax, accounting and/or legal advice before investing and before each investment, as you deem appropriate. We do not provide you financial, tax, accounting and/or legal advice.