Startup investments involve significant risks including illiquidity, foreign exchange risks, rarity of dividends and the risk of failure.
Tokeportal.hu provides a communication platform for such early-phase small and medium-sized companies, which have a sustainable business model and a validated business plan. During their campaign, these companies can share information – in compliance with the legislation in force – in order to attract investors and raise capital by private placement. Basic information regarding the campaigns is available to everyone but certain specific information regarding the terms of investment can be accessed only by approved investors. Tokeportal.hu does not match investors with project owners, nor does it engage in asset management, it only discloses information. Tokeportal does not give investment advice, nor does it make offers.
Investing in early-phase companies involves significant risks because the business model of these companies is unvalidated. Most early-phase companies do not pay dividends for years because they use the profit to fuel the growth of the company. Investors receive shares in exchange for their investment. These shares might lose their value over time and they might be difficult to sell. The rights of investors are not defined by Tokeportal.hu but by the companies’ articles of association or the Term Sheet. The tradability of privately issued shares is very limited. Therefore by buying such shares, in hope of future returns, the investor accepts that he cannot access his investment for a long time as well as the risks involved in the companies’ operation. Tokeportal.hu warns registered investors that they should invest in companies which raise capital through the portal only if they fully understand and accept the risks involved. Tokeportal.hu encourages investors to raise questions during the campaigns and evaluate the submitted answers carefully. Tokeportal.hu conducts basic due diligence and validates the information disclosed in the campaigns but it does not intend to cover every detail. Therefore, Tokeportal.hu does not take any responsibility for the business performance and the operation of the companies.
Valuation and dilution
In the course of equity-based crowdfunding campaigns, the companies sell shares in their company in exchange for the invested capital. For instance, if a company sells 20% of shares in exchange for a HUF 50MM of capital raise, it implies that the value of the company is HUF 250MM. It is the responsibility of investors to evaluate and accept this valuation. For the sake of understanding this valuation better, the investor can raise questions during the campaign. In case the company raises further capital at a later point in time and the investor cannot or do not want to participate in the next round, his existing shares will represent a smaller stake in the company. This decrease in the value of shares is called dilution.