The failure of Rebus shouldn’t tarnish an industry
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Why the collapse of Rebus is the exception rather than the rule for the equity and debt crowdfunding sector
As a spotlight is turned on the equity crowdfunding sector following the disappointing news of Rebus slipping into administration, it is worth remembering that the industry’s reputation for quality, rigorous due diligence processes, high standards and strict selection criteria has been built up over a number of years.
One of the critical points in the debate currently being played out in the media is often overlooked. That yes, while investing in early stage businesses and SMEs can carry a high risk factor, investment as a general rule of thumb always has an element of risk involved. The question is only one of degree and different people have different interpretations of what constitutes a tolerable level of risk.
Failures happen and the reasons behind these failures can often be complex. If this weren’t true every business founder would be a Steve Jobs and every company would enjoy the wild success of Apple. Unfortunately, it doesn’t work that way and whether a company is mature, for example Blockbuster, or a new startup such as the unfortunate Rebus, there are few guarantees of success in business.
The golden rules of investment rarely change, build a diverse portfolio which minimises your risk exposure while giving you the best chance of returns and never invest more than you can afford.
While no investment is ever completely without risk, and we’d never pretend otherwise, we believe that when you invest via responsible crowdfunding sites like Code Investing, Seedrs and VentureFounders you are investing in fully vetted UK businesses that represent value and have the potential to grow.
When it comes to the businesses Code Investing help fund, our track record for delivering quality investment opportunities speaks for itself, so far we’ve helped raised over £40m for the businesses in our portfolio.
Here are some other considerations to look for when deciding who to raise funds or invest with:
Are they authorised and regulated by the Financial Conduct Authority?
We’re authorised and regulated by the UK’s Financial Conduct Authority and operate to the highest standards. Before your account is activated we ask you to assess your understanding of the risks of investing in early stage companies. We do this in order to calculate a suggested limit, or “Investment Cap”, on how much each of our members can invest each year in these types of companies.
This is to ensure that we do not provide any misleading information and so that our investors fully appreciate and understand the risks involved, not investing more than they can afford.
Do they have a due diligence procedure
At Code Investing less than 16% of the businesses that apply to us for funding are accepted. This is because we set the bar very high, we’re committed to providing our crowdfunding network and institutional investors only the very best opportunities and we know that they may not always have the time to research every potential opportunity.
How do they make sure businesses are investor ready?
Our investment experts have a wealth of industry experience and they spend a minimum of three weeks checking everything from revenue projections and market valuations to company credibility and scalability.
How much of a vested interest do they have in the business succeeding?
We invest alongside our discerning crowdfunding network, as well as institution investors, business angels and HNWIs so that they know we’re as single-minded about ensuring a company’s success as they are themselves.
How experienced are they?
Our expert team have a wealth of experience in everything from investment banking to online trading and asset management and have worked with companies including Barclays, Orange, HSBC, IG, Bank of America, Deloitte, Goldman Sachs, Merrill Lynch and more. We know and understand the investment industry and we bring all of our expertise to bear in helping the brightest SMEs and startups achieve their funding goals.
Follow us on Twitter @codeinvesting for more investment news, insights and stories.
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Investing in early stage businesses involves risks, including illiquidity, lack of dividends, loss of your investment and dilution and it should be done only as part of a diversified portfolio. CODE Investing Limited is targeted exclusively at investors who are sufficiently sophisticated, or who are judged by CODE Investing Limited otherwise to be appropriate, to understand these risks and make their own investment decisions. You will only be able to invest with CODE Investing Limited once you are registered as sufficiently sophisticated or otherwise appropriate for these types of investment. Investors via CODE investing are not protected from loss by the Financial Services Compensation Scheme against the Company’s default or for any losses they may suffer. Please read the full risk warning for more information. This page has been approved as a financial promotion by CODE Investing Limited, which is authorised and regulated by the Financial Conduct Authority. Investments can only be made on the basis of information provided in the pitches by the companies concerned. CODE Investing Limited takes no responsibility for this information or for any recommendation or opinions provided by the companies.
Tax Wrappers note: Innovative Finance ISA (IFSA), Self Invested Personal Pension (SIPP) and Small Self Administered Scheme (SSAS) : eligibility depends on an individual’s circumstances and is subject to change in the future.