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Crowdfunding and Startups risk warning
Warning to Investor
Investment activities in unlisted or startup companies in the seed, growth or expansion stage, involves taking a number of risks, namely, lack of liquidity of acquired values or loss of value thereof, lack of income from capital return via dividends, risk of dilution of the stake in the company through capital increases in the future, and risk of loss of the invested money in part or whole. Because of this, LIGNUM CAPITAL recommends keeping a well diversified investment position, not to invest more than 10% of ones entire net assets, and refrain from investing to those who lack sufficient knowledge to understand the risks underlying this type of investment. LIGNUM CAPITAL, targets and recommends its use to accredited investors.
Risk of lack of liquidity
Liquidity measures the ease of an asset to be turned into cash after its acquisition. The easier the conversion (sale) of the asset into cash, the more liquid the asset is. Because the companies announced in the page of LIGNUM CAPITAL are not listed on a regulated and public sales market, the liquidity of their assets is low or very low. In consequence, there exists a significant risk that a buyer of such assets may not be readily found and, as a result, this investment should be considered as a medium and long term (1 year +) investment, and of scarce liquidity.
Risk of non-payment of Dividend
Dividends represent the distribution of the after tax profit, to shareholders of a company. Payment of dividends is not mandatory. LIGNUM CAPITAL warns that the distribution of dividends from companies in the startup or growth stage, is not frequent, since these companies use to reinvest the benefits generated, in order to boost its growth strategy. This can delay the return of the investment, and make the asset less attractive to potential buyers.
Risk of Dilution of the Share Acquired
Investments in assets, securities and/or shares in companies, are subject to the possibility of a forthcoming dilution, if its board of directors were to decide the issue of new shares, without LIGNUM CAPITAL being able to influence that decision. The dilution implies that those shareholders who do not sign the new shares issued, shall undergo a reduction of their stake in the company, proportionally to the increase of capital. This entails certain consequences, including the loss of voting rights, and a decrease in the percentage value of the share.
Nevertheless, the advertised companies can offer Ordinary Shares (class A) with voting rights, and preferential subscription rights, obliging the company to offer first to the shareholders of Ordinary Shares the opportunity to buy the new issued shares, thus avoiding the risk of dilution for shareholders. Investors are advised to verify, either in the bylaws of the company or in the partnership agreement, if any, that the shares they are buying include preemptive subscription rights.
Risk of Lack of Veracity of Information
Projects promoted through our platform are not subject to authorization or supervision by either the Spanish National Securities Market Commission or the Bank of Spain, and the information provided by our platform has not been checked by them nor, in the case of security issues, constitutes an informative leaflet approved by the National Securities Market Commission.
Risk of non-warranty
LIGNUM CAPITAL reminds you that participatory financing platforms do not hold the status of investment ser.vices or credit institutions, and therefore are not attached to any investments warranty fund or deposits warranty fund, with the risk that such lack of warranty entails
In any case, LIGNUM CAPITAL recommends its investors to hold a well diversified investment portfolio. In this regard, we recommend investors to refrain from investing more than 10% of their net worth in investments with high levels of risk announced in our platform.
LIGNUM CAPITAL reminds you that as a not accredited investor you cannot invest more than 3,000 euro in the same project. Nor more than 10,000 euro over a 12 months period in projects published by Lignum Capital.
If, in spite of the foregoing warnings you try to overcome those limitations, the platform shall not authorize the operation, and therefore you shall not able to carry out the investment.