1. Dilution of Equity Stake
As most businesses on the platform don’t generate internal accruals to reinvest, it is highly likely that they will raise more money in the future to fund their operations. This means that businesses may issue new shares to new investors thereby lowering the percentage of the shares you own. These new shares may also have rights that supersede yours.
2. Dividend Distribution
A majority of the businesses listed on the platform will be in the early stages of their life-cycle. Early stage companies are often unprofitable in their first few years of operations and hence would be unable to distribute dividends.
Although we intend to have a secondary trading facility to enable the transfer of shares, digitally represented by tokens, there may be instances (even after we have established the trading facility) where a liquid market for shares (represented by tokens) may not exist and thus, investors may not be able to liquidate their investment when they choose to do so. Regardless of whether a trading facility is established, investors may not be able to sell the investment when they wish to, or, at all.
4. Loss of Capital
Many early-stage businesses generally fail, and accordingly carry a high investment risk. Therefore, investors on the platform may lose all or part of their capital. Invest only the portion of your net worth that you can afford to lose without lowering your standard of living.
5. Platform ceasing to exist
If for any reason Bambucorn ceases to carry on its business, notwithstanding the exit plan in place, investors may lose their money, incur costs or experience delays in being paid.
6. Reporting Requirements
Companies listed on our website are not subject to the same requirements as a public company, although they are contractually bound to regularly update investors regarding their performance through our platform.
7. Higher degree of risk
The use of credit or borrowed monies to invest or on the platform creates greater risk. For example, even if the Investment declines in value, the investor will still need to meet their repayment obligations.