Risk Warning

To help you understand the risks involved when ##################ing in the shares of Campaigners on Fundwise, please get to know the non-comprehensive list of risks summarized below. This risk warning is under no circumstances to be considered as ##################ment advice or guidance. The risk warning is merely to remind you of the risks involved with ##################ing and especially with ##################ing into equity. If you are only starting out as an ##################or, please seek guidance from ##################ment consultant or other relevant experts or look for more elaborate training on ##################ing.

Diversify! 

Diversification involves spreading your money across multiple ##################ments to reduce risk. Although diversification is an essential part of ##################ing, it will not lessen all types of risk.

Please note that you should only ################## a proportion of your available funds via Fundwise and should balance this with safer, more liquid ##################ments.  

Equity ##################ments

##################ing in shares of a non-listed public or private limited liability company (also referred to as equity) on Fundwise does not involve a regular return on your ##################ment. 

Please make an effort to understand, accept and acknowledge the following particular risks involved with equity ##################ments:

1. Due diligence 

Fundwise has not done any due diligence on the entrepreneur (incl. legal, financial, tax or any other due diligence). The materials made available by the entrepreneur on the Fundwise platform may be non-comperehensive or may not describe all risks involved in the business of the company. If you identify a need to ##################igate the entrepreneur closer or more in-depth before making the ##################ment decision then you must reserve time and resources for doing so. Fundwise is not responsible for the truthfulness and/or correctness of the information provided by the entrepreneur on the Fundwise platform.

2. Loss of ##################ment

The majority of start-up businesses fail or do not scale as planned and therefore ##################ing in these businesses may involve significant risk. It is likely that you may lose all, or part, of your ##################ment. You should only ################## an amount that you are willing to lose and should build a diversified portfolio to spread risk and increase the chance of an overall return on your ##################ment capital. If a business you ################## in fails, neither the company – nor Fundwise – will pay you back your ##################ment.  

3. Lack of liquidity

Liquidity is the ease with which you can sell your shares after you have purchased them. Buying shares in businesses pitching through Fundwise cannot be sold easily and they are unlikely to be listed on any (primary or secondary) trading markets, such as First North or the Tallinn Stock Exchange. Even successful companies rarely list their shares on such exchanges. In addition, if you purchase only a small percentage of shares, these might not provide you any actual opportunity to influence any decisions adopted by the shareholders meeting of the Campaigner and, therefore, may not be attractive to potential buyers in the future. Also, all shares offered by Campaigners are encumbered by the pre-emption rights of all the other shareholders, which means that upon selling these shares any of the current shareholders can pre-emptively purchase the shares instead of the buyer you have chosen. This could result in transaction costs for you and the buyer of the share and the buyer might require you to cover its costs in case any of the current shareholders use their right of pre-emption.

4. Do not count on dividends

Dividends are payments made by a company to its shareholders as a distribution of the company’s profits. Businesses have no obligation to pay shareholder dividends as these are decided at the shareholders meeting and it requires the majority of the shareholders to pass such decisions.

Some of the companies pitching for equity on the Fundwise Site are start-ups or early stage companies, and these companies will rarely pay dividends to their ##################ors. This means that you are unlikely to see a return on your ##################ment until you are able to sell your shares. Early stage companies typically, but not always, re-################## their profits into the business to fuel growth (or in other words scale) and build shareholder value. 

5. Dilution

Any ##################ment in shares made through Fundwise may be subject to dilution in the future. Dilution occurs when a company issues more shares and the shares of the existing shareholders shrink in percentage due to the increase of the share capital. Dilution affects every existing shareholder who does not buy any of the new shares being issued for additional payment into the share capital. As a result an existing shareholder's proportionate shareholding of the company is reduced, or ‘diluted’- this has an effect on a number of things, including voting, dividends and value.

Campaigners who pitch for equity ##################ment through Fundwise offer shares, which as a rule include pre-emption rights that protect an ##################or from dilution. In this situation the company must give shareholders the opportunity to buy additional shares during a subsequent fundraising round so that they can maintain or preserve their shareholding. This pre-emption right, however, may be blocked by the decision of the shareholders meeting. 

6. Drag-along obligation

There might be shareholders agreements in place that you have to agree to when ##################ing and there might be drag-along obligations in these shareholders agreements. A drag-along obligation means that you might be dragged into a sale agreement of the share you hold in the Campaigner, while you might not in fact be interested in selling the share under the conditions of the sale. However, as most of the shareholders will be selling you have an obligation to join in the sale because of a contractual obligation under the shareholders agreement. Please check for any drag-along obligations in any possible shareholders agreement you have to sign in order to ################## into a Campaigner.