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What kind of companies can raise money through InvestingZone?

Applications to InvestingZone are open to any unlisted UK company which is seeking funding.

Why do companies need funding?

This varies from company to company, but generally speaking most businesses are loss-making in their early years, while they develop their product, conduct research, etc. These losses must be funded and in the absence of any meaningful bank lending to early stage companies, this is typically achieved through equity investment – i.e. by offering shares in the company in exchange for investment.

Even profitable companies may require investment, perhaps to enter a new market or develop a new product more quickly than they could otherwise do.

Whatever the need and whatever the stage, companies look to take on investment to increase their value and to benefit all shareholders and if they succeed then they can be very profitable investments indeed.

Who can invest through InvestingZone?

Anyone who is over 18 is eligible to apply to register as an investor through InvestingZone. However, it is important that potential investors understand the risks involved in unlisted equity investments and that these investments are appropriate for their individual circumstances.

For this reason, as part of the registration process, we ask investors to complete a short questionnaire which assesses both their circumstances and their investment experience. Only investors who can demonstrate the judgment and understanding required to properly assess the investment opportunities on our platform will be permitted to browse and invest in pitches.

Non UK investors

Although overseas investors can back pitches on InvestingZone, the administrative burden of carrying out anti-money laundering checks and arranging one-off bank transfers mean that this is only practical for commtments in excess of £2,000.

It may be unlawful in certain jurisdictions for users to view or invest in pitches on InvestingZone.  It is up to individual users to satsify themselves that they are compliant with their local rules and legislation before registering with InvestingZone to view pitches.

If you are based outside the UK and you wish to back a pitch on the platform please contact us here so that we can record your commitment and arrange a bank transfer.

Aren't these investments very risky?

It is certainly true that unlisted equity investments are more risky than many other forms of investment such as listed equities, bonds and savings accounts. If a company fails then it is possible that shareholders will lose all of the money they have invested. However, unlisted equities can also be very profitable investments when a company succeeds.

We believe that it is for individual investors to assess whether or not the risk involved in an investment is balanced by the potential rewards and whether or not that investment is appropriate for their circumstances and existing investment portfolio.

For further information on the risks involved in investing through InvestingZone, see Risks or visit our Learning Zone to download a guide for investors.

Is InvestingZone regulated by the FCA?

InvestingZone Limited is an Appointed Representative of Seneca Partners Limited, which is authorise and regulated by the FCA.

Have the pitches on InvestingZone been approved or reviewed in any way?

All pitches are subject to an initial review by InvestingZone. This review is focused upon making sure that the opportunity presented is likely to be of interest to investors and is complete in terms of the type of content presented. InvestingZone will conduct a due diligence process with support from Corporate Financier Acceleris Capital before the live pitch is confirmed by Seneca Partners. This includes a Director's Declaration, meeting with management and review of the companies business plan, balance sheet and forecasts. 

It is important for investors to understand that they should carry out their own research and ask their own questions of the pitching company’s management to enable them to take their own investment decisions.

Neither InvestingZone’s approval of a pitch nor Seneca’s approval constitutes any kind of recommendation to investors.

Does InvestingZone recommend investments?

No, neither InvestingZone nor Seneca Partners (the FCA regulated and authorised entity which approves the financial promotions) recommends any individual pitch or investment.

Is there a minimum or maximum amount I can invest?

There is a minimum investment of £100.  There is no maximum investment other than the limit imposed by the amount of money the pitching company is seeking to raise.

What is GoCardless?

GoCardless is a direct debit service which InvestingZone uses to simplify the investment process.  Using this service enables us to avoid taking your funds until an investment is near completion.  GoCardless generates a temporary direct debit mandate for the amount you would like to commit for a small fee (1% of your commitment, capped at £2), which will be paid by the company.

What will I actually get for my money?

You will become a shareholder in any company you back which successfully completes its investment.  You will receive a share certificate from the company in due course and, depending on the eligibility of the company, the forms required to allow you to claim your EIS or SEIS tax relief.

What are non-voting shares?

Non-voting shares are shares which generally carry the same economic risks and benefits as voting shares but which do not give the bearer the right to a vote on certain important company matters.

Some other crowdfunding platforms allow companies to offer non-voting shares to investors.  InvestingZone takes the view that this is wrong – small investors deserve the same rights and protections as large investors and the ability to vote on important company matters is vital to their ability to manage their investments.

Companies pitching through InvestingZone offer voting shares.

Can I have voting shares?

Yes.  InvestingZone takes the view that non-voting shares disenfranchise small investors and may put their investment at increased risk.  Companies pitching through InvestingZone offer voting shares.

Can I stay involved with my investments? What information will I receive?

The information you receive will vary from company to company.  You can continue to engage with companies you have backed though the InvestingZone platform and you can also continue to monitor its activity through Duedil.  In future we will be adding a facility for companies to upload regular performance updates to the InvestingZone platform for investors to see.

Will I be able to participate in further funding rounds in companies I have backed?

Shares offered through InvestingZone will carry pre-emption rights which allow investors the right to participate in future funding rounds.  This is an important tool for investors to protect against the dilution of their shareholdings.

What tax will I have to pay on investments?

Tax is a complex area which varies from company to company and from investor to investor.  InvestingZone can provide no tax advice to any investor or company and you should seek advice from your tax advisor if you have any questions regarding your individual circumstances.  However, both investors and pitching companies should make sure they are aware of the benefits of SEIS and EIS tax reliefs which can make investments in unlisted equities much more attractive.

What does InvestingZone charge investors?

InvestingZone does not charge investors for using its platform.

How risky are investments in unlisted equities?

Unlisted equity investments are more risky than many other forms of investment such as listed equities, bonds and savings accounts. If a company fails then it is possible that shareholders will lose all of the money they have invested. However, unlisted equities can also be very profitable investments when a company succeeds.

We believe that it is for individual investors to assess whether or not the risk involved in an investment is balanced by the potential rewards and whether or not that investment is appropriate for their circumstances and existing investment portfolio.

Risk warning

Guide to investing through InvestingZone

What are the risks?

The most obvious risk to consider is that a company in which you invest may fail. If this happens it is likely that you will lose all or most of your investment.

Secondly, your investment will be at risk of dilution if the company raises further funding and issues further shares at later date. The level of dilution will depend on the valuation of the company and the amount of money it raises.

Finally there is also the risk that your investment will be illiquid, even if the company succeeds. There is currently no ready market for unlisted shares and so you may well be unable to sell your shares until the company is acquired or floats on a stock exchange. The loss-making nature of many unlisted companies also means that you are unlikely to receive dividend income.

You should be certain that you understand these risks before making any investment through InvestingZone.  Read our risk warning here and visit our Learning Zone to find out more about investing.

What does InvestingZone charge companies to pitch?

InvestingZone only charges fees to companies which are successful in raising funds and it costs nothing to create a pitch.

For pitches listed after 1 November 2013, the following charges are payable by companies which pitch successfully:

Upon successful fund-raising 6.5% of funds raised + VAT.*
Transaction fees £1,500 **
   
InvestingZone option InvestingZone Ltd will take options over 1% of the equity issued in your funding round

 

* Where a company has already raised money which is intended to form part of the same funding round, reduced fees of 2.5% + VAT will be charged.  The full fee of 5% + VAT will be charged on all investment raised, via InvestingZone or a third party once a company’s pitch is published on the InvestingZone platform.

** £1,500 is the standard legal fee for processing a deal.  Higher fees may be required for more complex deals and this will be discussed with each company before legal work commences.

Please click here for a detailed schedule of terms and fees.

How do I raise money for my company through InvestingZone?

Follow the "Get Investment" link on the front page of the website.  The platform will walk you through the information required to build your pitch.  Once complete you can submit your pitch for review, following which, if it is approved it will be listed on the platform for investors to review.

Visit our Learning Zone for a guide for companies.

How much money should I raise?

That depends on what you want to achieve. In our experience companies underestimate the amount of money needed to achieve their aims and so often fall short and fail. To address this we require you to add 10% to your estimate to provide some headroom. This headroom also allows an investment to complete even if some investors fall away at the last minute. We allow investments to close anywhere above 90% of target.

Whatever the amount raised, the share price is fixed – i.e. if your target (including headroom) is £100k with 10% equity on offer but you only reach £96k committed then your round will close on £96k and you will issue shares for 9.6% of the equity.

What types of shares will my company have to offer?

InvestingZone believes that small investors deserve the same rights and protection as larger or professional investors.  Accordingly we only allow companies to offer voting shares to our investors.

There are other considerations – you should be aware that most investors viewing pitches on InvestingZone will be seeking companies which are EIS or SEIS eligible.  That means that most companies will issue Ordinary shares rather than Preference shares of any kind.

If you are in any doubt about whether your company’s shares will qualify for EIS or SEIS then you should visit the HMRC website or consult a tax advisor.

Will I have to offer investors the right to participate in future funding rounds?

Yes.  Pre-emption rights, or rights to participate in future share issues, are a vital tool for investors to protect against unwanted dilution of their stake in a company.

InvestingZone believes that an investor who does not have these rights is potentially at a severe disadvantage and therefore we take the view that all companies pitching through InvestingZone should offer them.

Will the company's diverse shareholding be off-putting to potential later stage investors?

 

We don’t believe so. Fundamentally, later stage investors are seeking high quality deals in which to invest.  No serious investor would be put off by a company’s share register.

InvestingZone investments are structured correctly from the ground up with all investors receiving ordinary shares with full voting rights on equal terms. 

Structuring an investment correctly from the ground up makes follow-on funding a simple process for both the company and the investor. Potential investors for a future open offer will be encouraged by a potential increase in share valuation and a share register with professional investors. Existing investors will be able to easily re-invest to maintain their theoretical rights and all investors can use the voting tools on the market-leading InvestingZone company portal. 

 

What browsers does InvestingZone support?

InvestingZone officially supports the most recent versions of:

  • Firefox
  • Google Chrome
  • Internet Explorer
  • Safari

Using other browsers not listed above may result in an unpredictable user experience.

We support IE8+, FireFox 19+, Chrome 20.0+, and Safari 5+.

Latest browsers can be found here

Safari - System requirements Mac & PC
Chrome - Mac & PC system requirements here.
Firefox - Mac, PC & Linux system requirements here.
Internet Explorer - System requirements for PC Only here.

Your best bet is to use the most recent official release that you can for any browser.

If you’re not sure how to determine if your browser is up to date, please contact us for further assistance.

Where can I find out more?

If you’d like to download a guide to investing or pitching through InvestingZone please visit our Learning Zone.

Why do I have to register before I can view pitches?

So as to protect investors and companies alike, we only allow pitches to be viewed by investors who have proven themselves to possess the knowledge and judgment to properly assess the opportunities presented.  To assess this we ask all potential investors to complete a short questionnaire during the registration process and until this has been successfully completed, the full details of pitches will not be visible.

Why can I only complete the questionnaire once?

It is important that your responses to the questionnaire give a genuine picture of your knowledge and understanding. If we allowed investors to answer multiple times then everyone could pass the questionnaire simply by trial and error.

If you believe that your application has been rejected in error please contact us at info@investingzone.com.

Why do you need my name/address, date of birth etc?

When you invest in a company and acquire shares, that company needs to record your details in its register of members.

Why do I have to pass a test to be able to register as an investor?

So as to protect investors and companies alike, we only allow pitches to be viewed by investors who have proven themselves to possess the knowledge and judgment to properly assess the opportunities presented.  To assess this we ask all potential investors to complete a short questionnaire during the registration process and until this has been successfully completed, the full details of pitches will not be visible.

What is an elective professional investor?

An elective professional is an individual who has been assessed as possessing the expertise, experience and knowledge which gives reasonable assurance that he/she is capable of making his/her own investment decisions and understanding the risks involved in a transaction.

How can I find out more information to help me assess a pitch?

We encourage investors to carry out their own due diligence prior to making an investment through InvestingZone.  To aid in this we have provided links to DueDil (a free source of information on UK companies).  We also provide a discussion forum in which pitches may be discussed and questions may be asked of the company.  Finally, we encourage pitching companies to conduct scheduled conference calls (using Skype) during the pitch process so that potential investors may ask questions and get to know the company a little better.

How do I invest in a company?

Once you have successfully registered as an investor you will be able to review the full details of the pitches on InvestingZone’s platform.  Having made the decision to invest, simply enter the amount you would like to commit in the box on the right hand side of the pitch and click “Invest”.

Does InvestingZone hold my money?

No.  InvestingZone never holds your money.  It flows directly from your bank account to a client account held by the lawyers who are executing the transaction.  The funds will not be passed to the company in which you have invested until all legal agreements have been completed.

Will it affect the amount of shares I get for my money?

No. The company agrees to sell enough shares to satisfy investors commitments, up to the amount shown on their pitch. So, for example, if the company was originally willing to offer to sell 30% of its shares for £100,000, we require the company to commit to sell 33% of its shares for the pitch target, in this case £110,000. So the amount you pay for each share is exactly the same, whether the pitch closes at £100,000, £110,000, or any amount in between.

Why does a pitch have to reach its target?

Companies raising investment through InvestingZone need the money for a variety of reasons.  However, in each case they need a certain amount to accomplish their aims and there is no point in raising any less.  InvestingZone automatically adds a 10% contingency to each pitch so that a company’s target is 110% of the amount it thinks it needs.  This contingency provides some headroom in case the company has underestimated its requirement but also allows an investment round to close even if a few investors pull out at the last minute.

What happens when the target is reached?

Once a pitch reaches its target, InvestingZone will instruct lawyers to begin drawing up the legal agreements behind the investment transaction and your funds will be drawn from your account under your GoCardless direct debit mandate. Once the legal process has been completed, investors’ funds will be transferred from the lawyer’s client account to the company and the investment transaction will be complete.

Shortly after completion the company will issue you with your share certificate.

What if the 100% target is not reached by the deadline?

It depends on how much is committed. If the amount committed is less than the pitch target, the pitch does not succeed and no funds are taken from investors. If the target is reached, legal process begins and your committed investment is transferred.

If some unforseen event occurs, for example an investor pulls out at the last minute, the investment will still proceed, provided the total cash investments received are at least 90% of the pitch target.

If the total cash received is less than 90% of the target, the pitch fails and no money is taken from investors’ accounts, but you will be invited to keep your commitment in place whilst the company is given a little more time to attract investors who may have missed the opportunity, the first time around.

Can I still invest in the company if the pitch fails?

If the pitch fails before the legal process begins, then no money is transferred from your account and your investment cannot be made.

If the target investment has been reached, but the total amount of cash actually transferred is less than 90% of the pitch target, the company will be allowed to re-open its pitch for a limited period. In these circumstances, you will receive an email, to explain what is happening and ask you to agree to continue your investment commitment.

When the company reaches its original pitch target, the process continues to legal contracts, as before.

Can I cancel my investment?

Yes, you can cancel your investment at any point before funds are drawn from your account.  Please contact us by email if you wish to cancel an investment to which you have committed.

What happens to my direct debit mandate after it has expired?

The GoCardless direct debit is only valid for a certain amount of time.  Once an investment has either successfully completed or has failed to meet its target and has lapsed, you can of course contact your bank to cancel the mandate for added peace of mind.

What happens after investment?

Once an investment transaction completes, you will receive a share certificate from the company.  You are free to contact the company whenever you like and InvestingZone will encourage companies to maintain contact with its investor base through its discussion forums on the platform.

Will other people be able to see my investments?

You will be able to choose whether or not other users can see your investment history.

How/when will I make a return on my investment?

Your investment is likely to increase in value if the business succeeds and grows.  However, you will probably only be able to sell your shares if the company is acquired or if it floats on a stock exchange.  You should be certain that you understand the risks involved in investing in unlisted companies before making any commitment to invest.

What happens if a company in which I have invested fails?

If a company fails it is likely that you will lose some or all of your investment.  The company may be sold for a nominal price or it may have assets which can be sold, possibly resulting in a small distribution to shareholders but this is likely to be far less than your original investment.  You should be certain that you understand the risks involved in investing in unlisted companies before making any commitment to invest.

How can I mitigate the risks of investment?

Firstly, given the risky nature of these investments you should never invest more than you can afford to lose in any unlisted company.

You should also consider any investments you wish to make as part of a larger investment portfolio. Although everyone’s circumstances and appetite for risk are different, most people should not invest more than 20% of their overall savings/investments portfolio in unlisted equities. You should seek advice from a qualified advisor if you are unclear how this relates to you.

Finally, it is best to spread any investments you make in unlisted companies over a number of companies. Although unlisted equities can be a profitable investment class overall, the simple truth is that most companies will fail and success is highly skewed towards a few, very successful companies. Therefore, although there are no guarantees, by spreading your investments you diversify the risk of failure and improve the chance that one or two big successes may outweigh the failures.

Can I raise debt or other types of finance through InvestingZone?

No.  InvestingZone only allows companies to raise equity finance.

What information should my pitch contain?

The platform will walk you through the information required, but you should expect to provide information on the nature of your business, its place in the market, its management team, its current ownership, how you intend to use the money and how you expect to provide a return on the investment you raise.  You will also be required to provide basic financials in a fixed format and a short pitch video.

What makes a successful pitch?

The most important factor in the success of any pitch is the quality of the investment opportunity.  However, there are a number of things you can do to boost your chances of raising money.

Firstly you should ensure that you produce a short video to accompany your pitch.  You should use this video to introduce yourself, the company and its product to investors and you should make it as interesting and upbeat as possible.  It is important to remember that this video forms part of your pitch to investors and that it must be fair, clear and not misleading.

Secondly you should engage with potential investors through InvestingZone’s discussion forum, answering questions and providing additional information where necessary.  Finally you should use the platform to notify investors of your availability for Skype calls to take questions in person and to allow investors to get to know you a little better before they commit to funding your business.

Can I alter my pitch once it goes live?

No, pitches have to be approved before they go live and once this has happened they cannot be altered.  You can provide updates to the pitch and you will also be able to answer investors’ questions.

How should I engage with potential investors during the pitch process?

InvestingZone provides pitching companies with the means to communicate with potential investors through a discussion forum and to provide updates on its pitch.  We also encourage companies to schedule conference calls with investors using Skype.  You should be careful to be open and honest with investors in all your communications.

How much equity should my company offer?

The equity you offer is your decision – you set the percentage offered and investors decide whether or not to invest.  The equity you offer effectively values your company (if 10% is worth £x then following the investment, 100% must be worth £10x).  You should ensure that this valuation is reasonable and reflects the position and potential of the business.  InvestingZone may decline to accept any application which it feels carries an unrealistic valuation which will not be attractive to investors.

Are investments in my company eligible for SEIS/EIS tax relief?

This will depend on the exact circumstances of your company and upon the details of your investment round.  You should seek advice from HMRC or from your accountants to ascertain your eligibility for these tax reliefs and we advise that you seek advance assurance from HMRC that the shares you are offering will be eligible.  This will enable us to label your pitch as SEIS/EIS eligible and will greatly increase its appeal to investors.

What information will I have to provide to investors post-investment?

Your obligations will depend upon the terms in the legal agreements behind your investment round, but whatever the strict requirements we would encourage you to provide your investors with regular management accounts and other updates through the InvestingZone discussion forum.

Maintaining shareholder engagement will mean that you will find it easier to raise further finance from existing shareholders should you need it. In addition to this, your investors will be savvy, intelligent individuals who are successful in their own right and you will find that many can contribute to the development of your business.

Won't I miss out on the guidance and mentorship which comes with more traditional angel/VC investment?

No.  InvestingZone will provide you with a discussion forum which can be used to update your investors and maintain a dialogue post-investment.  You will find that many of your investors will take an active interest in the company’s progress and will be able to contribute to its success through contacts and experience of their own.

Can I appoint investors to my board?

Yes, though there will be no obligation to do so.  If you identify an investor who you feel would add to your Board then you can approach him/her independently of InvestingZone to arrange this.

What if my company fails? Will be held personally liable?

No.  Individuals investing through InvestingZone understand the risks involved and that a company may well fail.  As long as you have acted honestly and in accordance with your legal duties as a director then you will bear no personal liability.

How will investors make a return on their investments?

If your business succeeds then it may be acquired by another company or even go on to float on a stock exchange. Either of these events may allow your investors to sell their shares and to realise a return. It may be possible for investors to sell their shares privately before either of these events takes place, but that is very uncertain and investors understand that they cannot rely on being able to do this.

There is also the possibility that your company will become very profitable and may be able to return cash to investors in the form of dividends. Again, investors understand that dividends are uncertain and unpredictable and that an exit in the form of a flotation or an acquisition is the most likely way in which they will make money.

Can I invest if I'm not based in the UK?

Although overseas investors can back pitches on InvestingZone, the administrative burden of carrying out anti-money laundering checks and arranging one-off bank transfers mean that this is only practical for commtments in excess of £2,000.

It may be unlawful in certain jurisdictions for users to view or invest in pitches on InvestingZone.  It is up to individual users to satsify themselves that they are compliant with their local rules and legislation before registering with InvestingZone to view pitches.

If you are based outside the UK and you wish to back a pitch on the platform please contact us here so that we can record your commitment and arrange a bank transfer.

 


Do you still have a question for us? Feel free to get in touch. Our support team are on hand to help. Contact us