Please read this risk warning carefully before considering an investment through the Enterprise Investment Scheme (EIS).

You Could Lose All the Money You Invest

Investing in early-stage, unlisted businesses through the Enterprise Investment Scheme (EIS) carries significant risk. There is a high chance that the business you invest in could fail, and if this happens, you could lose your entire investment. EIS investments are inherently riskier than investments in established, publicly traded companies.

Advertised Rates of Return Aren’t Guaranteed. This is Not a Savings Account.

Any potential returns or growth projections discussed are not guaranteed. The value of your investment can fall as well as rise, and you may get back less than you invested. This is not a savings account where your capital is typically protected. If the business you invest in doesn’t perform as expected or fails, you could earn less money than anticipated or nothing at all. Higher potential returns often come with higher risks of losing your money. If an investment sounds too good to be true, it probably is.

EIS Investments are High Risk and Not Covered by the FSCS for Poor Performance

Investments under the Enterprise Investment Scheme (EIS) are considered high risk by the Financial Conduct Authority (FCA). This means that if you lose money on your EIS investment due to the failure of the business or poor performance, you will not be eligible for compensation from the Financial Services Compensation Scheme (FSCS). The FSCS primarily protects deposits in banks and credit unions and covers certain types of regulated investment activities where firms fail.

EIS Tax Reliefs Depend on Circumstances and May Change

While the EIS scheme offers potential tax benefits, these are dependent on your individual circumstances and on the company you invest in maintaining its EIS-qualifying status. Tax rules and regulations can change in the future, which could affect the benefits you receive.

Your Investment May Be Illiquid and Difficult to Sell

Investments in early-stage companies are often illiquid. This means there may not be a readily available market for the shares you invest in, and it could be difficult or impossible to sell your shares and access your money before a certain point.

Dilution of Your Investment

If the business you invest in issues more shares in the future, your percentage ownership of the company will decrease. This could also reduce the value of your existing investment.

Limited Information and Due Diligence

Investing in early-stage businesses often means there is less publicly available information compared to investing in larger, listed companies. It is crucial that you conduct your own thorough due diligence and understand the risks involved before making an investment decision.

We recommend that you seek independent financial advice before investing through the EIS. Ensure you fully understand the risks involved and that this type of investment is suitable for your financial situation.

For further information on investment risks, please refer to the Financial Conduct Authority (FCA) website: https://www.fca.org.uk/investsmart/understanding-high-risk-investments