Early-phase companies (unlike the ones publicly listed on the stock market) usually do not have a validated business model. According to research at least nine out of ten early-phase companies fail or stagnate and one out of ten becomes successful. Therefore you have to consider that your investment in crowdfunding campaigns is much riskier than investing in bonds, shares publicly listed on the stock exchange or keeping your money in a bank deposit. However, your gain might be also much higher, which compensates for the risk. Probably you won’t realize a return on your investment soon even if the company becomes successful because early-phase companies usually use their profit to fuel growth and do not pay dividend. Furthermore, the sales of shares might be limited, too. The dilution of the shares constitute another type of risk, which occurs during an additional round of capital raise. If the number of shares increase, then the existing shares represent a smaller share of the company. Therefore the value of your investment decreases unless you purchase additional shares. The most difficult thing is that usually you have to wait for years until you can sell your shares in the company.
You can read about risks in more detail in our Risk Disclosure.