Risk Factors​

It is important to understand that every investment made on the Equity Portal platform comes with its own risks. Equity Portal cannot assure that a company will achieve its business goals or that you will receive a return on your investment. Before making an investment on Equity Portal, you must perform your own due diligence and satisfy yourself that you are making a wise investment. 

Any investment is a risk, and there is the potential that you can lose some, or all of your investment.

Small Business Investments

Investing in small businesses carries a greater degree of risk than an investment in an already established larger public company. A large percentage of small businesses ultimately fail, and even for those that don’t, it is possible that you will not receive returns on your investment above what you had invested, or may lose your investment entirely. Investing in companies that are not trading on the public market, may make it difficult to sell off your investment. Small businesses face many challenges by virtue of being small. These include and are not limited to:

  • Difficulty raising capital, 
  • Issues surrounding the manufacturing and marketing of their product, 
  • Rapidly changing technologies;
  • Staffing and hiring issues;
  • Contending with patent and intellectual property issues; and
  • Ever changing government regulation and changes to government policy that could impact certain necessary regulatory approvals.
Changing economic conditions

A small businesses success or failure hinges upon many factors including the current economic climate. In a down market, a company that has yet to establish itself in its field will have a difficult time breaking through and becoming profitable.  

Given the uncertainty in today’s world with respect to political unrest and global pandemics to name a few, the economy’s growth and success has never been as tenuous. This unpredictability has a direct impact on the risks of your investment in a small business.

Future and past performance

When deciding which company is right for your investment, while it is important to understand the company and its past performance, do not let that be the only metric by which you evaluate your decision. A company’s past results are only a small factor in their future results.  

Difficulty in Valuing Small Business Investments

One of the most difficult problems investors face when investing in a small business is determining the actual value of that small business’ security. Without large volume results or sales to base their valuation upon, a small business will often times rely upon speculation to determine value. Established larger companies have their own voluminous history of operations and sales to help an investor evaluate whether to make an investment. A small business requires an investor to take a greater risk with their investment.

Minority investments / Limited Rights

The majority of the investments made through the Equity Portal platform will result in an investor receiving a minority stake in the company. Minority shareholders will often times be left with little to no rights with respect to the operations of the company, including no voting rights. Even in instances where a voting right is attached to your investment, as a minority shareholder, your vote will not carry the same weight as a majority shareholder. You will have to rely upon the company’s board and management to make decisions, regardless of whether you believe them to be what’s best for the company’s success.

Lack of information for monitoring and valuing small business

It is often times difficult to track changes as they take place in the management or operations of a small business. It is important to understand that as an investor in a small business, you will have to be comfortable with the lack of information that is available to you regarding your investment. While you will eventually receive information, it will likely be delayed and potentially no longer accurate.

No assurance of additional capital for small businesses

Small Businesses must often rely upon investments or other forms of institutional or private financing to maintain operations. Cash infusion can often be difficult to obtain.

Absence of liquidity and public markets

Unlike investing in a public company that trades on large stock exchanges, an investment in a private company, like the ones on the Equity Portal platform, leaves an investor with few options to sell off an investment or security. This can make it difficult to turn your security into cash.

Legal and regulatory risks associated with crowdfunding

Equity Portal cannot assure that the small business that you choose to invest in will comply with all the federal requirements surrounding private company fundraising.

Tax risks

Equity Portal does not offer its users any advice with respect to the tax implications surrounding an investment on the Equity Portal platform. Before making an investment on Equity Portal, please consult your tax advisor.

Diverse investors

When investing in a small business, especially one that uses a platform like Equity Portal, it is important to understand that you and the other investors come from different backgrounds and different economic circumstances. As such, when making decisions on behalf of the Company, the board or its members will consider what is best for the shareholders as a whole, and not how you will individually be impacted.

Lack of investor control

Small Businesses will not rely upon its investors to make business decisions.

Confidential information

When receiving information regarding the operations of a company, it is important to understand that this information can be highly confidential, and if shared, could have a negative impact of you and your fellow investors.

Forward-Looking statements

The data contained in forward-looking statements are based off of many factors including the current economic landscape, current performance of the company and various other potential future forecasts. It is important to understand that these expectations are based off of assumptions after having considered the data. 

Forward-looking statements are subject to risks and uncertainties. Many factors can cause future results to differ significantly from these statements, including but not limited to:

  • the Company’s stronghold in their respective industry and the competition that it faces;
  • the Company’s ability to secure additional financing;
  • other risk factors beyond the Company’s control.

Forward-looking statements only identify information from the date that it has been generated. Do not expect a small business to update or disclaim its forward looking statement.

All investments come with some form of risk. Before choosing to invest in a company using the Equity Portal platform, please seek independent advice from your own legal counsel or accountant. 

  • Risk Factors