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Frequently asked questions
- What are the risks?Most startups fail. Only invest what you can afford to lose.
If Nomisma doesn’t ‘exit’ (i.e. IPO or acquired by another firm), you won’t get your money back and you won’t make a profit.
If Nomisma grows slowly, you might be waiting a long time for a return. Don’t invest any money that you might need suddenly in an emergency.
- What is an equity investment?If you invest in a business on Crowdcube, you become an investor in the company – you have a share of ownership, or equity, in that business.
Most investments are for Ordinary Shares, giving you voting and pre-emption rights on those shares, but you should check the share class on the pitch as this can vary. In most cases, your shares will be held for you by Crowdcube Nominees Limited. Learn what a nominee is and does.
If the business is a success and is eventually bought by another company or goes public at a higher value than it was when you first invested, you’ll get a return on your investment. However, the opposite is also true. If the company fails, you may lose some, or all, of your investment.
Investing in startups and early-stage businesses is long term and 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 typically relies on the company being sold or going public. In addition, dividend payments are rare and the likelihood of your percentage shareholding being diluted by future fundraising is high.
So it’s important to diversify your investment portfolio by spreading your money across multiple investments and asset types. While you cannot eliminate all types of risk, this will help cushion your losses if some of your investments fail.
- What is equity crowdfunding?Equity crowdfunding involves people – the “crowd” – investing money in an early-stage private, or unlisted, company (a company that is not listed on a stock market) in exchange for a share, or equity, in that company.
As an investor in a company, you own a percentage of the business. So if the business does well and goes on to make a successful “exit” – typically when the business “goes public” and lists on the stock market, or is bought by another company – at a higher value than when you invested, you will get a return on your investment and make a profit.
However, the opposite is also true. If the company fails, you may lose some, or all, of your investment.
- How do I make an investment?To start investing, you need to join Crowdcube – it’s completely free. Then you can browse open investment opportunities and find a business you want to invest in.
Once you’ve found a business you want to back, click ‘Invest Now’ on the pitch page and choose how much money you want to invest. You can pay for your investment using a debit, credit or prepaid card.
You can invest from as little as £10, but you will be prompted to make your investment in an exact multiple of the share price. For example, if the share price is £3.10, the minimum investment in that pitch will be £12.40. The amount you invest, and the equity issued/number of shares bought, will affect what percentage of the business you own.
When the business reaches its funding goal, you’ll have a cooling-off period, which generally lasts around seven days, to review your investment. This gives you a chance to reduce or cancel your investment if you’ve changed your mind. You can do this by contacting CrowdCube.
Once the cooling-off period has expired, we’ll take the payment for your investment. Congrats! You’re an investor. We’ll then send you your digital statement of ownership, share certificates and any tax relief certificates.
You can then keep updated with the company and vote on key decisions through the platform. Eventually, if the business is a success and is bought by another company or goes public at a higher value than it was when you first invested, you’ll get a return on your investment.
- What are the tax reliefs available?The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are UK government schemes designed to help smaller higher-risk trading companies raise finance, by offering a range of tax relief to investors who purchase new shares in those companies.
Where a business is listed as 'EIS' on Crowdcube, this tax relief will be available to qualifying investors.
Crowdcube doesn't conduct raises with SEIS support.
Learn more about EIS here.
Learn more about SEIS here.
See EIS at a glance here.
- Is there a minimum holding period to claim relief with EIS/SEIS?SEIS or EIS shares must be held for a minimum of three years to benefit from income tax relief, and as such should be seen as a long-term investment. You must retain your shares until the share termination date shown on your S/EIS certificate. If your shares are sold before you have held them for three years, you will have to inform HMRC and repay any income tax relief you have claimed.
- When will I receive my EIS/SEIS certificate?When will I receive my EIS/SEIS certificate? The company must have been trading for 4 months they have raised before they can submit a EIS/SEIS application to HMRC.
Providing the company meets the above criteria, we will work with the company to prepare the necessary paperwork and submit an application for tax relief to HMRC.
Once the paperwork has been submitted, HMRC generally advises that they can take up to 45 working days to process the application. HMRC will then send approval to issue tax certificates, at which point we will make your certificate available to download from your portfolio.
If you change your postal address, your tax relief certificate will update automatically when you have updated your Crowdcube account. Please also ensure you advise HMRC of a change of address.
You can find more information on how to claim EIS or SEIS on your investment once you have received your certificate here.