We're crowdfunding again!

Crowdfunding has become a popular way for individuals to invest in private businesses. However, it's essential for first-time investors to be aware of the risks involved. Here, we break down some key statements and facts related to crowdfunding for a better understanding of this investment approach.

Most startup businesses fail, and profitability may take a long time and isn't guaranteed.

Startup businesses are statistically more likely to fail than publicly listed companies.

If a business you have invested in fails, you are likely to lose all of your money, with no chance of any initial investment being returned.

Assessing the likelihood of a return on investment is the responsibility of the individual investor.

Once invested, selling your shares is not guaranteed, and you cannot ask for your money back at any time. Any return will likely be long-term (5+ years) and you are unlikely to receive dividends.

Most companies that have crowdfunded will not be tradable on a public stock exchange and you will likely only see a return in a limited number of circumstances, such as if the company is acquired.

Investments in startup companies should be a small part of your portfolio, mixed with lower-risk investments. Diversifying your investment portfolio means spreading your investments to reduce risk.

The valuation of private shares is sometimes hard to estimate, meaning you will not always know the latest value of your investments.

The equity you own may decrease if a company issues further shares, and minority shareholders are unlikely to be asked before a company issues additional shares.

A company can issue shares at a lower share price in the future, and in the event that a company is acquired by another business, you may be forced to sell your shares at a loss.

Yes, every investor will receive shares in “Penfold Technology Limited” for which Penfold is our trading name. The number of shares you receive will be proportionate to the amount you invest. The final number of shares issued depends on the number of investors and amount of money raised.

We will notify anyone who registers their interest before the campaign goes live. Anyone that pre-registered will receive exclusive access to the campaign before it is made public.

The campaign will last up to 7 days, ending whenever we reach our investment target. If we reach our target early, we‘ll give notice 24 hours before the round closes. Please note, there is a limited amount of equity available in this round and we expect the round to fill quickly. We encourage you to invest as soon as the round opens.

Having raised £19m to date, including over £1m in this round, we’re seeking this top-up to accelerate the growth of our Workplace proposition, and continue introducing improvements to both our product and customer service. Please see our business plan on our Crowdcube page for more details.

If we are fortunate to raise more than our target, we’ll use the extra investment to grow the company even more quickly than we currently plan. Raising investment above our target simply means we will have more shareholders and be ‘giving away’ a larger percentage of our company.

Please note your payment is not taken upon investment.

Once a pitch has been funded and has closed to further investment, you will receive a cooling off email, which includes a copy of the company’s Articles of Association for you to review.

During this cooling off period, which is generally no shorter than 4 days (including weekends), you’ll have the opportunity to review your investment before it becomes final. Once the cooling off period has expired, we’ll send you an email confirming when your payment, which includes your investment and Crowdcube’s investment fee, will be collected.

We will issue shares to the Crowdcube Nominee to hold for you after the successful completion of the campaign, once your investment has been processed. Completing the round and necessary paperwork takes a few weeks, but typically you can expect to receive confirmation from the Nominee of your share ownership around 4 weeks after the campaign has ended.

Penfold is a private limited company which means, at present, there is no public forum for buying and selling our shares. Shares may be bought and sold by private arrangement, however, you must first offer them to other shareholders before transferring them to a single third party at your own expense.

It’s possible, although no such plans are currently in place. This would be an opportunity for you to sell your shares.

Yes, our business plan (and financial overview) will be available on our Crowdcube campaign page. If, after reading it, you have any further questions please don’t hesitate to contact us. You’ll find our contact details supplied in the pack - we’re happy to answer all questions or supply any additional information.

There are two ways you could make a return on your investment: (1) selling your share in the company for more than you paid for it, and (2) receiving dividends from the company.

Selling your shares

Ideally, the business you’ve invested in will grow to a point where it lists on the stock market (“going public”), is bought by a larger company, or the company management buys back equity from investors. At that point, you might be able to sell your shares and make a profit.

Receiving dividends

In addition, if the company you’ve invested in becomes profitable, it may be able to pay dividends. Read more, including some examples of the exits and dividends our investor community have realised, on Crowdcube’s investor returns page.

The Enterprise Investment Scheme (EIS) is designed so that your company can raise money to fund your company’s growth, by offering tax reliefs to individual investors who buy new shares in your company.

Under EIS, you can receive up to £5 million each year, and a maximum of £12 million in your company’s lifetime. This also includes amounts received from other venture capital schemes.

You can find the latest information on EIS from HMRC, here.